The eye of the hurricane over Southeast Europe may soon be shifting, exposing Greece to the same 150 mph gale turmoil everyone has grown to love and expect over the past three years as soon as this month, when a new proposal by Greece is due on how to cut a massive 150,000 public sector jobs: a move which will result in an immediate surge in public unrest, and an exponential jump in strike activity. As Bloomberg reports, "Greece is locked in talks with international creditors in Athens about shrinking the government workforce by enough to keep bailout payments flowing. Identifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a 2.8 billion-euro ($3.6 billion) aid installment due this month. More than a week of talks on that has so far failed to clinch an agreement."
“Public sector job cuts are a major part of the program and they are one of the most politically difficult parts to achieve,” said Holger Schmieding, chief economist at Berenberg Bank in London. “And for the Greek government, which has two left-of-center parties, it is extremely difficult to really implement those job cuts. I’m afraid this will likely stay a point of contention, review after review after review.”
As a result Europe can continue keeping its eyes closed and continue handing over billions in unconditional aid to Greece, however, with Germans increasingly unhappy with the arrangement where their country is the only designated driver at the European alcoholic relapse free for all, this may be untenable. Therefore, it is likely that Greece will have to come through with at least some major muscle cutting proposals. These in turn will certainly inflame the country, and force it to rethink its pro-European majority stance, especially now that as Kathimerini reports [9], the country has not one but two counter-Eurozone political powers:
Former SYRIZA leader Alekos Alavanos has announced plans to launch a movement that will campaign for Greece to leave the euro.
"All countries have a Plan B for Greece, only Greece does not have a Plan B should it have to leave the euro," Alavanos told Skai television on Tuesday.
He said the movement would aim to stand in the European Parliament elections in 2014 and would favor a return to the drachma.
"If Greece were to exit the European Union we would be much better off than we are today and would never have had to reach this point," he said, adding "that no country has ever managed to exit a crisis with a 'hard' currency. The euro is a hard and expensive currency."
He said that his movement will also favor the nationalization of banks and for Greece to repudiate its debt.
"It is madness to have the same currency as Germany when Germany, unlike us, has a stable economy," Alavanos said.
Alavanos is, of course, right. However, with the empirical evidence of what 2 years of Greece on the brink of European departure has shown, is that the last thing Europe will agree to is a return to a Greece that is one foot in, one foot out of the Euro, as this will immediately put the OMT in play: an OMT, which as we have repeatedly discussed in the past, is wonderful in Draghi talking points to clueless reporters, but an epic failure if and when it should actually be put into use.
And Greece, where it all started back in 2010, may be just the catalyst that brings Europe, where nothing at all has been fixed in the past three years when one ignores the central bank-manipulated markets, full circle.