Greece Agrees to Pay Reductions and New Taxes

At Midday, Greece announced it would make a sweeping austerity plan and save around 4.8 billion Euros. The budget cuts targeted civil servants, the church and the rich. The European commission said that the cuts were a sign that Greece was showing improvement. Germany was quick to temper Greek hopes and market expectations for more concrete support, saying it would offer no aid when Chancellor Angela Merkel and Greek Prime Minister George Papandreou meet in Berlin on Friday.

Prime Minister George A. Papandreou expressed hope for European solidarity but could not rule out going to the I.M.F. “We are now justifiably expecting E.U. solidarity, which is the other side of this agreement,” he during in a televised conversation with President Karolos Papoulias. “Europe faces a historic responsibility.” E.U. officials say that options being discussed to help Greece include aid from individual countries or a joint effort by euro-zone members involving loans or, more likely, a pledge to buy bonds. The involvement of state-owned German and French banks is thought to be the most plausible outcome.

In the streets of Athens protests were rampant. Some of the cuts threatened to reduce working hours, wages, pensions and benefits. The citizens of Greece feel victimized by their government’s mismanagement of its finance. “We have offered our labor to this country but they were more interested in building villas and big businesses. They should be ashamed, we have already made sacrifices,” a citizen said in an interview to Reuters.

It will be a long road to restructuring Greece but there are still concerns if the infrastructure can be changed.