Fenech warns Greece: No pain, no pay

‘We don’t owe Greece a living’

The Greeks would get no more money from Malta unless the government was convinced the aid was being used to carry out painful but necessary market reforms, Finance Minister Tonio Fe­nech warned yesterday.

Reflecting the stern stand adopted by eurozone finance ministers on Thursday, Mr Fenech said he could not allow Maltese money to end up in “a bottomless pit”.

Eurozone countries stalled cash aid, necessary to prevent a devastating default in Greece, by postponing a decision on the second bailout package worth €130 billion to next week.

The decision came as thousands of Greeks, hard-pressed by fresh austerity measures that have also led to the Deputy Prime Minister’s resignation, yesterday clashed with riot police in Athens.

But social unrest is unlikely to soften the view of eurozone finance ministers with Mr Fenech insisting the Greeks had to shoulder “national responsibility” for the mess their country was in.

“While I understand the sentiment of people protesting over hefty wage reductions they also have to ask themselves whether it is right to expect European people, who earn lower wages, to continue bailing them out at all costs,” Mr Fenech said.

The eurozone has stalled cash advances under the first bailout package agreed to in 2010 and has not yet unlocked the second bailout package reached last year.

Mr Fenech said the common sentiment among eurozone finance ministers was that, despite the numerous Greek pledges to cut expenditure and introduce market reforms,

effective implementation was lacking.

“We want to support and show solidarity with Greece but we don’t owe the Greeks a living by paying for their excesses,” he said, insisting that other European governments, including Malta, took the necessary measures over time to put their finances on a sustainable footing.

Even the latest 22 per cent cut in the Greek minimum wage would still leave it with the highest in the EU, rendering the country uncompetitive, Mr Fenech added.

Public sector wages are double the EU average.

Mr Fenech described the Greek economy as a predominantly old-fashioned Socialist economy, “almost Communist in nature”, with government controlling many loss-making entities in various sectors.

Greece has to continue reducing its high recurrent expenditure by cutting down its bloated public sector, he insisted. It must also carry out market reforms by privatising government entities.

On the prospect of Greece leaving the eurozone, Mr Fenech said it all depended on the Greek gov­ern­ment’s commitment to implement the agreed programme.

However, eurozone countries are worried because, with an election in Greece due next month, not all political parties have signed up to the bailout pact, stoking the fear that a new government will not honour the deal.

“This is not acceptable to the eurogroup. Greeks have to make a national effort because, otherwise, the aid cannot be provided with all the consequences this brings about.”

Greece faces €14.5 billion in bond payments on March 20 and an agreement on the second bailout package is crucial for its survival. The package also includes a voluntary write-off by the private sector of €100 billion in loans from Greece’s debt mountain of €350 billion.

Greek austerity

The three-party coalition in Greece on Thursday agreed on a new austerity plan that has to be approved by Parliament tomorrow if the country wants to secure more bailout money from the eurozone and the International Monetary Fund.

The measures include 15,000 public-sector job cuts, the liberalisation of labour laws, cutting the minimum wage by 22 per cent and negotiating a debt write-off with banks.

[email protected]


See our Comments Policy Comments are submitted under the express understanding and condition that the editor may, and is authorised to, disclose any/all of the above personal information to any person or entity requesting the information for the purposes of legal action on grounds that such person or entity is aggrieved by any comment so submitted. Please allow some time for your comment to be moderated.

Comments not loading? We recommend using Google Chrome or Mozilla Firefox with javascript turned on.
Comments powered by Disqus