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By Alex Lantier
23 April 2011
The European Union has declared Greece is not doing enough to cut its public spending deficit, and is threatening to enact the same austerity measures demanded by the EU and International Monetary Fund last year—measures that led to deep social cuts and rising unemployment.
“Greece has a policy problem,” European Commissioner for Economic and Monetary Affairs Olli Rehn said Wednesday, “It has become a crisis,” according to AFP.
Last year, Greece was forced to sell off its public utilities and the country’s national bank—Bailout Party members voted for these policies—to allow it to secure loans from the European Union and the International Monetary Fund. Under the terms of the loans, Greece was required to cut spending by 20 percent, raise taxes, sell off state assets and drastically reduce unemployment.
Greece’s socialist-led government sought to implement these austerity measures, raising taxes and cutting public sector wages and pensions, but was able to do so only with the assistance of a debt-bailout. The Greek people supported this policy—62 percent of them voted in a referendum to accept the austerity measures—and the EU forced Greece to carry out the measures in exchange for continued financial assistance.
But the Greek government failed to follow through on any of its austerity pledges. According to Greek statistics, tax revenue fell by nearly 20 percent and continued to fall. Spending was cut by 10 percent, rather than 20 percent, as the government had promised.
The Greek population is not happy about the failure of the measures. Unemployment remains above 20 percent, government debt is now approaching 160 percent of GDP, and the government is refusing to meet budget cuts that are required by European and IMF demands.
The Greek government is now asking the EU for a new €88 billion bailout—equivalent to a third of the country’s GDP—to bailout banks, ac619d1d87
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