| ATHENS, Sept 3
ATHENS, Sept 3 When Jean-Claude Juncker, head of
the euro zone's finance ministers, arrived in Athens last week,
Greek Prime Minister Antonis Samaras ran down red-carpeted steps
to envelope him in a warm embrace.
In front of the man representing Greece's biggest creditor,
the governments of the euro zone, Samaras was understandably
eager to make an impression, and duly pledged to do his utmost
to win back Europe's trust.
The conservative leader was not always so keen.
Barely nine months ago he infuriated European officials by
refusing to give his written backing to austerity policies
demanded in return for the rescue funds that spared Greece from
Given his history of dubious political choices that included
voting against Greece's first bailout, Samaras has surprised
many - including some officials among sceptical EU and IMF
lenders - by trumpeting his resolve to push through cuts and
reforms that have tripped up previous leaders.
Deftly sidestepping pre-election rhetoric of an overhaul to
the bailout and pledges to avoid across-the-board wage cuts,
Samaras meekly promised to restore Greek credibility and
promptly set to work on new austerity cuts that include plans
for controversial labour reductions.
Much of that appears tied to his determination to secure
Greece's next tranche of aid of about 31 billion euros that is
on hold, in the hope it will end constant speculation of a Greek
exit from the euro zone and shore up its banks, ultimately
setting the wheels of the depressed economy in motion again.
"He is determined to adapt because he doesn't want the
grenade to explode in his hands. And at the moment there is a
risk that the grenade, in other words bankruptcy, will explode
in his hands," said political analyst John Loulis.
"He doesn't have a choice, because if that were to happen,
apart from the disastrous effects on the country, his political
career would be finished as well."
Even then, whether Samaras manages to deliver will depend on
how well he reins in fractious allies and whether his weak
coalition can persist in the face of anti-austerity protests
from Greeks who are already at boiling point.
Samaras is to some extent basking in the reflected light of
Finance Minister Yannis Stournaras, an economist well respected
in Brussels, who is widely seen as having boosted the
But Samaras also has to contend with the dark shadows cast
by Socialist ally Evangelos Venizelos, a former finance minister
who has attacked the bailout he helped draft after his party was
pummelled in elections.
"I'm a little concerned that Venizelos is behaving the way
Samaras was in the (Lucas) Papademos government, when he was
referred to as the 'head of the pro-government opposition',"
said Theodore Couloumbis of the ELIAMEP think-tank, referring to
Samaras's half-hearted support of the previous government.
"I think Samaras can deliver, but it's not up to him alone,
because it's a tri-partite coalition."
The stakes could not be higher as Samaras embarks on his
drive to reform a bloated public sector, step up long-delayed
privatisations and push through nearly 12 billion euros of
austerity cuts for the next two years.
Fed up with Greece's repeated failure to reform, European
leaders including German Chancellor Angela Merkel and French
President Francois Hollande bluntly warned Samaras during a
European tour last week that the country would get no further
aid, much less the two additional years it is seeking to hit
budget targets, unless he can show results.
Without further aid, Greece will be staring at certain
bankruptcy and a return to the drachma.
A source close to the troika said Samaras's team had made a
positive start by shifting the political debate away from
populist promises made during election campaigning that appeared
at odds with Greece's pledges to its lenders.
"They've moved some of that behind them, and they've managed
that quite well politically," the source said.
Despite Samaras's election pledge to avoid firing public
sector workers, the government has resuscitated the plan for a
so-called labour reserve that earmarks civil servants to be
eventually laid off, as part of the 2013-2014 savings plan.
Campaign pledges to avoid cutting wages for "special"
categories such as policemen and judges have also been ignored,
and such cuts are back on the table.
Samaras still has to convince Venizelos and his other ally,
Democratic Left leader Fotis Kouvelis, to sign up to the entire
package, and some of the proposals may be shelved.
But despite weeks of wrangling, both allies say they broadly
agree on the cuts and have signalled the package will have their
blessing next week when troika officials arrive in Athens.
In a bid to overcome the allies' concerns about protecting
poor Greeks, the government wants to force those earning more to
share a bigger burden of the cuts - from a 2 percent wage cut
for low-wage earners to a 12-14 percent reduction for
high-income earners, a government official said.
Far tougher for Samaras to pull off will be incremental
structural reforms to make the economy more competitive and
efficient, including overhauling its notoriously ineffective tax
Greece has notched up some limited progress - deregulation
in the trucking industry has pushed fees for licences down to
about 2,000 euros each from as high as 180,000 euros previously.
But efforts to open up other tightly guarded professions such as
pharmacists have been repeatedly thwarted by powerful lobbies.
Moves to streamline the public sector, which employs almost
a fifth of the country's 4.2-million workforce, are routinely
blocked by unions who are quick to strike and point out that
Greece's constitution bars firing civil servants.
The government is also under pressure to show it can push
through long-delayed privatisations, which the source close to
the troika says is still among Greece's "biggest stumbling
The administration quickly resolved the issue of troubled
state lender ATEbank by handing it to rival Piraeus
and now appears ready to settle the fate of another loss-making
state-controlled bank, Hellenic Postbank, after saying it was
not viable. But Greece is still a long way short of its targets
for privatisation proceeds this year.
"We need a quick win on privatisations," the government
"When we came to the government, we realised that we don't
only have a financial deficit, but also a deficit of
credibility, which is much more dangerous, because no-one would
talk to us. The first step is to regain credibility."