Demonstrators protest austerity cuts in front of Parliament in Athens. (Milos Bicanski / Getty Images )
Reporting from Athens — Thousands of protesters fed up with economic cutbacks marched in Athens on Tuesday as a team of international debt inspectors arrived in the capital to meet with national officials in the latest effort to avert a catastrophic Greek bankruptcy.
But the anti-austerity demonstrators, including doctors who canceled operations in state-run hospitals and transportation workers who kept the Athens metro idle, were smaller in number and more peaceful than the protesters who stormed the capital last year. And indications are that most Greeks still favor maintaining membership in the Eurozone: A recent poll showed 77% wanted the prime minister to do whatever necessary to keep the country within the single European currency fold.
The street march to the courtyard of the Parliament served as an unsettling greeting for the trio of visiting financial experts from the International Monetary Fund, the European Central Bank and European Commission, known as the troika.
To receive the troika's approval for the next installment of rescue funds to keep Greece afloat, Athens must also complete a complex bond swap with private investors, a deal that European leaders devised in October to shave Greece's nearly $500-billion debt burden by $126 billion, making it more bearable by 2020.
A new round of debt restructuring talks is planned for Wednesday, when Charles Dallara, head of a global body representing private holders of Greek debt, is to return to Athens. Greece is due to pay out in two months an $18.4-billion bond redemption, money it does not now have. And last week, Dallara walked out of talks here after "torturous" haggling over the interest rate, said to be under 3%, that a new bond could carry, said an official who is privy to the talks.
Known as the Private Sector Involvement, or PSI, the debt restructuring plan is an integral part of a second, $166-billion bailout package, which this debt-saddled and nearly bankrupt state can receive only if it clears each and every hurdle creditors have set before it.
"It's like a three-, if not multi-dimensional chess game," a senior government official said, speaking on condition of anonymity because of his proximity to the sensitive talks. "One wrong move can spell a lot of damage to a lot of players."
The $18.4-billion bond redemption is due to be paid out March 20, and without agreement on added rescue funds, plus a second bailout and debt-restructuring plan to make its debt load sustainable, Greece would slip into financial free fall, triggering a messy default and mayhem in global markets.
"This is really it. It's crunch time," said Thanos Veremis, a University of Athens professor. "The consequences for the country and the euro altogether will be so catastrophic that there are few sensible minds prepared to pay the price for that right now."
But after two years of brutal budget cuts that have nearly halved civil service salaries, slashed pensions and raised the jobless rate to about 19%, a growing number of Greeks, mainly young university students, appear to be warming up to the populist anti-euro, anti-austerity rhetoric.
For the time being, Prime Minister Lucas Papademos seems unyielding, bent on implementing the fiscal discipline that creditors are demanding.
"Some further reflection is necessary on how to put all the elements together," Papademos said this week in an interview with CNBC. "I'm confident that they will continue and reach an agreement that is mutually acceptable in time."
For Papademos, the urbane, bespectacled banker who took office in November after rivals socialists and conservatives agreed to form a coalition government, a negative outlook could imperil his ability to work with international creditors and push through vital reforms.
Last week, the leader of a minority coalition partner warned of a political stalemate if consensus could not be reached on measures that include wage and pension cuts, already promised to creditors.
"If no common line can be established," said Georgios Karatzaferis, president of the Popular Orthodox Rally, "then my party will withdraw.
"I want this to happen before the troika arrives," he said. But it has yet to happen.
Carassava is a special correspondent.