Deep running despair among Greeks despite bailout plans

By Christine Pirovolakis Feb 9, 2012, 17:07 GMT

Athens - Kostas Koutsavas is still trying to come to terms with the reality that his family business of 23 years has gone bankrupt, as he packs the last of the items from his clothing store in the Athens suburb of Paleo Faliro.

The soft-spoken 45-year-old father of two is now out of a job, having spent more time watching the debt-stricken nation's politicians arguing on television than selling his products.

After drawn out negotiations, the political parties in Greece's coalition government agreed on Thursday to adopt the new austerity measures needed to secure a second international bailout and prevent the country from going bankrupt.

Prime Minister Lucas Papademos called European Central Bank (ECB) chief Mario Draghi to tell him that a deal had been struck on new cuts demanded by the European Union, the ECB and the International Monetary Fund (IMF) in exchange for the 130-billion-euro (172-billion-dollar) bailout.

'They have destroyed the very foundations of the country and with these new measures will drive a large portion of the population into poverty - myself included,' Koutsavas told dpa.

With unemployment at over 20 per cent and the economy in its fifth year of recession, it could prove increasingly challenging for Koutsavas to find an alternative line of work in the near future.

Athens is also negotiating with private investors who hold a large portion of government bonds, with a view to a deal that would sharply reduce the country's borrowing costs.

But a debate is raging among economists in Greece on whether the recent sharp shift in economic policy from fiscal stimulus to fiscal austerity will lead the country to recovery or cause a new recession.

'The remedy is not right and there is a fear that the new measures will increase the recession,' Yannis Monogios, a researcher at the Center of Planning and Economic Research, told dpa.

'The government and its international creditors are not taking into account the social cost. There is no provision for the social safety net - such as for the unemployed - and social conditions deteriorating,' he said.

Many Greeks, like travel agent Hara Nikolopoulou, blame the government's lax attitude toward fighting tax evasion and its resistance to curbing the public sector for the latest round of measures imposed by eurozone leaders.

'They have done virtually nothing in the past two years to combat tax evasion, close down needless state entities and cut down on public spending - so our international lenders got fed up with us and hit the country with more pension and salary cuts,' she said.

The 46-year-old has seen her salary reduced by 42 per cent in recent months.

'The measures are unfair but what can we do - we are at their mercy,' she said.