But the protests seemed unlikely to disrupt what has become an almost unstoppable trend: grinding austerity in struggling southern European countries and limited prospects for the future. In Spain, many industrial workers were on strike. Italian unionists clashed with police. Transportation was hard-hit in Portugal. In some countries, electricity consumption dropped noticeably as factories were idled.
In Greece, the worst-off of the 17 nations that share the euro currency, there is uncertainty about the future funding of the government’s crushing debt, even as more than a quarter of workers are unemployed. That uncertainty has mixed with fury that, although the country approved even more austerity measures last week, Greece is being made to scramble to raise $6.4 billion to make a debt payment to the European Central Bank this week. Politicians had expected a new installment of bailout money to come immediately after the vote.
“The money we take from Europe, from the IMF, it doesn’t go into the country; it doesn’t go to start growth. It just goes to pay debts,” said Evangelos Rokos, 39, a laboratory worker at the National Technical University of Athens who walked off his job Wednesday. He was marching down a once-elegant main artery of central Athens whose shops, one by one, have shuttered.
European leaders indicated this week that they are likely to give Greece a $40 billion tranche of its bailout by the end of the month — forestalling bankruptcy and giving the country a bit of breathing room — along with an extra two years to implement painful spending cuts and open up labor markets in an attempt to bring back economic growth. But approval for the payment has been delayed, in effect, by arguments over just how grim Greece’s fiscal picture is.
The International Monetary Fund has been saying that because Greece’s debt and future growth prospects are so bad, European governments and the European Central Bank will have to write off part of the bailout money they have sent if the country is to have any hope of getting back on track. European leaders, mindful of how unpopular that might be at home, have sounded more optimistic. They say that if they simply give Greece a bit more time to meet its targets, the country will return to sustainability.
The dispute broke into the open earlier this week at a news conference where IMF Managing Director Christine Lagarde rolled her eyes at the more optimistic proposals of Luxembourg Prime Minister Jean-Claude Juncker, who leads the group of euro-zone countries.
At a conference Wednesday in Malaysia, Lagarde said that “obviously from the IMF’s perspective, we expect a real fix, not a quick fix, and that means clearly debt that is sustainable as quickly as possible,” Reuters reported. The IMF also has been pushing for the pace of austerity measures to slow in the hardest-hit countries, saying that some steps have been doing more harm than good.
With economies slowing down across Europe, even rich countries may soon start feeling the pinch, making big write-offs for the struggling periphery even more politically unpopular. Germany’s central bank on Wednesday released an annual report on the country’s financial stability indicating that such fears are not going away.
“Risks for the German financial system have not diminished in 2012 compared to the previous year,” the report said. “The European sovereign debt crisis has even grown more acute at times.”
In Greece, the austerity measures that squeaked through Parliament last week will clamp down further on some of the most vulnerable parts of the population. A retiree with a monthly pension of $1,270 will lose 5 percent of it, for example.
And the delay in sending new money to keep Greece from bankruptcy has further hit an already divided country.
“The only thing that will collapse is what remains of your credibility,” Alexis Tsipras, the leader of the leftist opposition Syriza party, said last week in Parliament before the budget vote, urging a rejection of the austerity measures and the bailout.
According to opinion polls, Syriza is now the most popular political party in Greece.
Elinda Labropoulou contributed to this report.