European governments and the International Monetary Fund yesterday averted a Greek tragedy, pulling the world’s first democracy back from the brink of default with $146 billion in bailout loans — on the condition Athens make budget cuts and enact tax increases.
After chiding Athens for years of mismanagement and cheating on budget reports, the IMF and Greece’s 15 partners in use of the euro rewarded Prime Minister George Papandreou for agreeing to tough measures, including cuts in civil servants’ pay.
Overpaid and underworked public workers for years had enjoyed a deal sweeter than baklava — including an unbelievable two months extra pay every year just for showing up to work.
They’ll have to give up some — but not all — of their incredible perks under the deal.
And they’ve vowed to fight.
Workers are threatening a nationwide general strike Wednesday, and police are poised for massive protests they fear will turn violent amid acts of civil disobedience.
The givebacks demanded by the European Union include:
* Civil servants will lose their “bonus wages” of two months’ extra pay per year. It will be replaced by a payment of about $1,300 a year for those making less than $4,000 a month.
* Private-sector bonuses will not be cut, but employers will have more leeway to lay off employees and cut their wages.
* Retired workers — both public and private — will also lose their two extra checks a year if their pensions exceed $3,300 a month.
* Public-sector wages and pensions will be frozen for three years.
* The retirement age will go up.
Stathis Anestis, spokesman for Greece’s largest umbrella union, whined:
“These are the harshest, most unfair measures ever enacted. That is why our reaction will be decisive and dynamic. You can’t always make the workers pay for the results of failed policies.”
The country will also be hit by a slew of tax increases and new levies — including a boost in the value-added tax of up to 2 percent.
Taxes on fuel, alcohol and cigarettes will rise by 10 percent.
Also, luxury-goods taxes will go up, and, for the first time, gamblers will be taxed on their winnings.
German Chancellor Angela Merkel said she was optimistic that her country’s parliament would pass legislation clearing the way for the bailout by Friday.
The German government has been the least enthusiastic member of the European Union about lending money to Athens.
Papandreou said, “I have done and will do everything so the country does not go bankrupt.”
He added, “We are called on today to make a basic choice. The choice is between collapse or salvation.”
The loans will keep Greece from defaulting on its massive debt and keep the crisis from spreading to some of the other EU countries with shaky economies, including Portugal, Italy, Ireland and Spain.
After years of spending like there’s no tomorrow, Greece’s deficit has grown to a crippling 13.6 percent of its gross domestic product.
Finance Minister George Papaconstantinou said that thanks to the bailout, Greece is expected to return to GDP growth after 2011.
Washington lauded Greece’s “ambitious” reform program and welcomed the “significant support” agreed to by the International Monetary Fund and Athens’ EU partners.
After President Obama called Papandreou yesterday, the White House released a statement saying, “The two leaders discussed the importance of implementation going forward.”