ITALIAN LEADER CRITICISES GREEK-SBERBANK BAILOUT TERMS

ITALIAN LEADER CRITICISES GREEK-SBERBANK BAILOUT TERMS

By Honor Mahoney, July 30,2013

EUobserver.com / Economic Affairs / Italian leader criticises Greek bailout terms

S - Greece's international lenders approved the latest tranche of its bailout money Monday (29 July) amid criticism that the reform programme Athens is expected to do in return has "worsened the crisis."

Greece is to get €5.7 billion in total from the International Monetary Fund, the eurozone bailout fund (EFSF) and eurozone central banks.

The bailout payout came after weeks of negotiations, particularly on how Athens should slash thousands of public sector jobs, a move that has caused strong anger in Greece.

Germany, paying most towards the bailout, held out until the last to make sure that Greece undertook promised reforms.

But still the country's lenders are complaining about its slow progress.

An assessment by the European Commission Monday said it was falling behind on reforming the public sector and business rules. Privatisation also needs to be stepped up.

IMF chief Christine Lagarde was also critical of Greece's efforts.

"Progress on institutional and structural reforms, in the public sector and beyond, has still not been commensurate with the problems facing Greece."

Referring specifically to the public sector reform, with Greece meant to cut a total of 150,000 jobs between 2010 and 2015, she said "efforts should focus on ensuring the exit of unqualified personnel to create room to hire new staff with the relevant skills."

But Greece has a public ally in the Italian prime minister.

In Athens to discuss the countries' EU presidencies next year, Enrico Letta said that had Greece's reform programme been designed differently, it would have caused less of a negative impact on the eurozone crisis.

“The timing was wrong. The instruments were wrong. The interventions were not made in the right way and at the right time and this worsened the crisis," he said, reports ekathimerini.

He also warned that if the EU does not manage to solve Greece's crisis, then there is a risk that this will play into the hands of eurosceptic parties in next year's European elections.

"If Europe is seen to be powerless to resolve Greece's economic crisis, voters will say that Europe does not function and will probably turn to eurosceptic and anti-European parties," said Letta.

He said there was a "big risk" that such parties will gain over 30 percent of the seats in the European Parliament.

In Greece itself, where disillusionment with how the EU is handling the crisis is high, the far-right anti-immigrant Golden Dawn party won almost 7 percent of the vote in last year's general election. Opinion polls show that its support is growing.

For his part, Greek leader Antonis Samaras also urged greater focus on growth-making policies.

He said that Greece's recession - now in its sixth year - was hindering the government's efforts to reduce debt while the broader eurozone recession was not helping either.

‘‘Greece, Italy, and all of Europe are in need of policies that combine reforms and deficit reduction with growth,’’ Samaras said, reports the Associated Press. ‘‘Of course we cannot have growth while Europe is retreating into recession.’’