On 3rd February, the European Commission approved the fiscal measures announced by the Greek government to put the country’s finances to rights. The programme presented by Greek Prime Minister George Papandreou includes “extra austerity measures a wage freeze in the public sector, a 10 percent reduction in civil servant supplemental pay and an increase in fuel tax,” explains Kathimerini.

The Athens daily warns that the European Commission has said it will “be keeping a close eye” on the implementation of this plan. However, Dilema Veche in Bucharest points out that “it is not possible to force a sovereign country that is a respected member of the EU and the eurozone to rein in its spending.” The risk is that the EU will continue to be viewed as “a nice, naive body that is an absolute sucker for villains”, but it is unthinkable that Greece would be allowed to go under. That, notes Dilema Veche, would be “like handcuffing two prisoners together, then telling them that the laws of gravity are different for each of them!”

Strong commitment to the eurozone

In the meantime, as Costas Iordanidis writes deploringly in Kathimerini, George Papandreou was elected because he provided hope, but he has had to give in “to pressure from the financial markets”. Both the conservatives and the far-right party support these austerity measures, but “whether there will be a strong reaction from the public is a question that remains open”. The current situation shows the “immense failure” of successive governments over the last 30 years and the sizable cuts to ministry expenses and a reduction in the Parliament’s budget are “a sure-fire way to undermine the political system even further”.

“Greece, then, is the front line of a wider battle to stay on the path demanded by European Monetary Union,” economists Nouriel Roubini and Arnab Das write in the Financial Times. “The political commitment to the eurozone of every country that has come under the gun is unwavering – witness Ireland's deep budget cuts; Portugal's painful deflation; the sharp adjustment of aspirants such as Latvia or Hungary. Lack of political and fiscal union, limited labour mobility but free capital movement make such adjustments critical to the long-term viability of the eurozone.”

Portugal fears being compared to Greece

In Spain, the stability plan presented by José Rodriguez Zapatero’s government presented to Brussels got a bad reception. El País thinks that economic policy requires “greater political rigor” and “clear and truthful statements of reform” following news that pensions will continue to be calculated on the basis of 15 years rather than 25 years as announced. Responding to remarks by the Commissioner for Economic Affairs, Joaquín Almunia, about the “loss of competitiveness” and “high level of public debt” in Greece, Portugal and Spain, Elena Salgado, the Minister of Economy and Finance, stressed that Madrid “has been doing everything required to get out of recession for a long time now”. The Spanish national debt is expected to reach 74.2% of GDP in 2012, compared to 120% for Greece in 2010.

As for Portugal, “the government’s worst fears” came true “when Almunia echoed several international analysts’ comparison of the problems facing Greece and Portugal,” Público explains. The Lisbon daily goes on to say: “Almunia said that whereas the Greek programme is ‘ambitious but realistic’, Portugal will have to ‘speed up’ the rate at which it consolidates its budget. This is precisely what the Portuguese government has been trying to avoid – identifying the situation in Portugal with that in Greece.”

Biggest gamble in history of the Irish state

The final ‘PIG’, Ireland, has chosen a different path. Dublin is about to take what the Irish Independent describes as “the biggest gamble in the history of the State.” Brian Cowen’s government is launching NAMA (National Asset Management Agency), a 90 billion euro plan to save the banks and boost the economy, one of those most severely affected by the global crisis in the whole of Europe. NAMA has extensive powers to take over property and construction projects whose developers are unable to pay back the money they have borrowed, and it will buy loans back from banks in exchange for bonds.

But it is the Irish public that will pick up the tab for "delinquent debts we never wanted in the first place,” the Irish daily observes. Before the Commission gives this extremely risky project the go-ahead, NAMA must complete initial valuations on the largest property loans and has already announced that “assets will be bought at a 30% average discount”. This isn’t particularly good news for the taxpayer though because “the banks will be left with bigger-than-expected holes in their balance sheets, and these will have to be filled with more fresh capital . . . by the Government.”