By Lefteris Papadimas and Renee Maltezou
ATHENS, June 6 (Reuters) - Greeks reacted with a mix of vindication and outrage at the International Monetary Fund's admission it erred in its handling of the country's bailout, berating an apology that comes too late to salvage an economy and countless lives in ruins.
Anger was palpable on the streets of Athens, where the EU-IMF austerity recipe that the Washington-based fund says it sharply misjudged has left rows of shuttered stores and many scrounging for scraps of food in trash cans.
"Really? Thanks for letting us know but we can't forgive you," said Apostolos Trikalinos, a 59-year old garbage collector and a father of two.
"Let's not fool ourselves. They'll never give us anything back. I'm sorry for all the people who killed themselves because of austerity. How are we going to bring them back? How?"
The IMF acknowledged on Wednesday that it underestimated the damage done to Greece's economy from spending cuts and tax hikes imposed in a bailout, which was accompanied by one of the worst economic collapses ever experienced by a country in peacetime.
A report looking back on the bailout said the Fund veered from its own standards to overestimate how much debt Greece could bear, and should have pushed harder and sooner for private lenders to take a "haircut" to reduce Greece's debt burden.
Greeks said it was about time.
They have seen their incomes plunge by about a third since the debt crisis erupted in 2009 and prompted Greece to seek two bailouts from the EU and the IMF. The unemployment rate has hit nearly 27 percent and suicide rates have soared. Worst hit have been the youth, nearly 60 percent of whom are unemployed.
"The IMF admits to the crime," the leftist Avgi newspaper declared on its front page. Top selling newspaper Ta Nea branded it an "admission of failure".
In the corridors of power, some officials suggested the admission could strengthen their hand in future talks with the IMF, European Union and European Central Bank, collectively known as the troika, on debt relief or new austerity measures.
"It is positive that the report recognizes that there were mistakes in Greece's programme in the past and we hope that they will not be repeated in the future and then create the need for corrective action," a senior government official told Reuters.
Greece's conservative-led government has not commented on the IMF report ahead of a statement expected later on Thursday by Prime Minister Antonis Samaras.
For many Greek politicians who complained for years that they were forced to sign off on the bailouts under the threat of a chaotic default and euro zone exit, it was also a moment of vindication.
"The IMF report confirms and records the positions that we have repeatedly presented in public, which formed the basis of our arguments during tough negotiations with the IMF and the other two parties of the troika," former Finance Minister Evangelos Venizelos told Reuters.
"There are many choices that we would have never made on our own, but we were obliged to take in order to avoid the worst."
Venizelos, who now leads the Socialist PASOK party in the ruling coalition, negotiated Greece's second bailout in 2012 after reluctantly backing the first bailout. His predecessor, George Papaconstantinou, who negotiated the first bailout in 2010, declined to comment.
Other former officials felt the Greek position was finally being given its due.
"I feel vindicated like most of the Greeks who felt that they have been punished more than they deserved by the troika", said Pantelis Kapsis, the government spokesman under the former technocrat Prime Minister Lucas Papademos's government.
All political parties - especially the leftist, anti-bailout front - are likely to claim victory from the IMF admitting it misjudged the impact of austerity on Greece's economy, but Samaras, in particular, could leverage it into a bargaining chip in future talks with EU and IMF, say analysts.
"It makes it easier for the Greek government to say 'slow down all on these measures' that have led to six years of recession and record high unemployment," said Theodore Couloumbis from the ELIAMEP foreign policy think-tank.
"It's like going to a doctor who's been treating you for cancer when you fundamentally had Parkinson's and the doctor says, 'I'm sorry.'"
The apology could also begin to heal the wounded pride and humiliation that Greeks felt from being portrayed as lazy, overpaid and living off the largesse of hard-working northern Europeans.
"The recognition of this mistake is part of the credibility which has been restored in the country and may become the starting point for Greeks to get part of what they have lost so far," said Dimitris Mavros, head of the MRB pollsters.