Despite Bailout, Greeks See Tough Road Ahead

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John Kolesidis / Reuters

An employee walks inside the Athens stock exchange on April 12, 2010

History has taught Greeks to be skeptical of promises of rescue by foreign powers, and the trail of failed plans to help Greece deal with its mountain of debt over the past few months has done little to assuage those fears. So despite the news Sunday, April 11, of a European bailout-loan offer worth some $40 billion, with the possibility of $20 billion more from the International Monetary Fund (IMF), Greeks are growing increasingly pessimistic about their future.

"Germany is not doing us a favor. No country is doing us a favor," says Spyros Skalitis, a pensioner who has been debating the bailout offer with friends in Athens. "We're just getting more and more in debt ... The position that the country has reached now, it's never going to improve."

Unlike previous rescue deals, the one agreed to Sunday by European finance ministers comes with hard numbers, and Greek officials are hoping it will convince the financial markets that Europe is serious about helping their country recover. But Greece hasn't said yet whether it will ask for the promised money — it still wants to try to borrow from the markets and will watch to see if the pledge is enough to calm investors and bring down interest rates. If that doesn't happen in the next few days, however, officials quietly admit that Greece may have to put out a begging bowl to Europe.

Many Greeks are worried that European countries or the IMF will place harsh conditions on any bailout money and force already struggling Greece to endure more austerity measures. The country has already passed two rounds of such measures in recent months, leading to violent protests by hooded youths in Athens.

Marios Velissarakos, 34, sells vegetables in one of Athens' many street markets. He says he and his customers are already suffering from the recession and the first two rounds of austerity measures. But he expects things to get worse before they get better. "Of course there will be more measures," he says as two gray-haired women haggle over bundles of wild greens, adding that he hopes people will go to the streets to protest when there are. "Maybe in 10 years we will see if things get better."

But even if the agreement gives the government some breathing room, Greece faces a tough road ahead. The markets — and Europe — will be watching closely to see if the country's socialist government can follow through on the deeper structural reforms Greece needs to implement to rein in its staggering debt and jump-start its moribund economy. As part of its pledges to its European partners, Greece has already cut civil servants' pay and raised taxes. But those are merely short-term measures. The bigger challenge is to reform the country's tax and pension systems, liberalize controlled areas of its economy and cut the size of the civil service. All of these will require taking on powerful interest groups, like the country's unions.

Joanna Kontiza, a 33-year-old pharmacist, says she is happy Europe is coming to Greece's rescue but is losing faith that the current government could address any of the country's deeper problems. "We are angry, but we're not angry with the [European] Union. We are angry with our own people, our leaders," she says. "They see that we have problems, but I see now they are just making changes in the easy way. They don't do the things that will make a difference for the future."

Still, the Greek government has so far managed to retain broad support despite the harsh austerity measures and street protests. And even Kontiza — whose husband, a doctor with the military, had his pay cut — says she realizes the government was left with few options for a crisis of this magnitude. But the salary cuts and taxes are starting to bite, and that's souring the mood. Greeks are feeling poor — again — and cutting back their spending. According to the National Confederation of Greek Commerce, retail sales are down 15% to 20% so far this year. Support for the government could soon begin to dissolve too.

For Prime Minister George Papandreou, who is walking a delicate line between external demands and what Greeks will accept, the deepening gloom will make his job that much harder.