On reform, Europe asks Greece to go where many fear to tread

Wed Jul 22, 2015 11:04am EDT
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By Mark John and Holger Hansen

PARIS/BERLIN (Reuters) - Greece's new bail-out deal imposes a stiff dose of budget rigor and market deregulation which critics say few leaders of Western Europe's biggest nations have dared serve their own voters.

"Francois Hollande is very good at telling others how to do their reforms," opposition French conservative Xavier Bertrand said in a dig at France's Socialist leader, a key broker in the Greek accord clinched on July 13 after all-night Brussels talks.

"So what's he waiting for in France?" said Bertrand, who was labor minister in the 2007-2012 government of former President Nicolas Sarkozy, which also struggled to make good on campaign pledges to revamp the euro zone's second largest economy.

While euro zone leaders deflect cries of double standards by insisting the tough measures are justified to rescue Greece from collapse, such jibes underline how uneven reform has been in the 19-member currency area since its launch in 1999.

While she has balanced Germany's budget for the first time since 1969, Angela Merkel faces regular criticism that she has done little in a decade in power to modernize the bloc's biggest economy since taking over from Gerhard Schroeder, voted out in 2005 after introducing a raft of painful labor reforms.

The demands made on Athens to win a new bail-out worth up to 86 billion euros would, if implemented, transform the Greek economy from the bad boy of Europe into a reform poster-child.

They come as Greece pursues spending cuts of such rigor that it eked out a small primary budget surplus before debt service for the second successive year in 2014, in stark contrast to repeat deficit-sinning by France.

Desperate times call for desperate measures, Greek creditors respond, arguing that this is what happens when your national debt hits 177 percent of gross domestic product and a crumbling economy leaves one in four of the workforce with no job.   Continued...

A man walks past pictures of ancient coins in central Athens, Greece, July 13, 2015.   REUTERS/Jean-Paul Pelissier