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(ARIS MESSINIS/ARIS MESSINIS/AFP/GETTY IMAGES)
(ARIS MESSINIS/ARIS MESSINIS/AFP/GETTY IMAGES)

Harper endorses Greece's austerity program Add to ...

Prime Minister Stephen Harper has endorsed Greece's painful and controversial austerity program to deal with threats of debt defaults that could trigger new financial crisis in Europe.

In a visit to Athens, where strikes and massive protests have become a daily feature of Greek life, Mr. Harper said he had been reassured in detailed briefings from Greek Prime Minister George Papandreou that the austerity plans will succeed -- and told his Greek counterpart he is on his side.

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Mr. Papandreou's latest round of restructuring measures, including a $50-billion sell-off of government assets, remain deeply controversial at home, but also have yet to reassure financial markets, some European partners, and international financial institutions that Greece's economic restructuring has been deep enough -- and will meet conditions for a $12-billion IMF bailout to re-finance its debts in July.

"They went through with minister Clement and I in great detail the measures that have been undertaken here to deal with those problems, further measures that will be taken to ensure that these problems, the resolutions stay on track and that everything's resolved," Mr. Harper said in a joint press conference with Mr. Papandreou.

"And we have every confidence that our Greek hosts here and that our European friends will continue to deal with these matters so that the global economy can continue moving forward."

The expressions of support from Mr. Harper, a persistent preacher of international fiscal discipline, was more upbeat that then cloudy worries that Canadian officials, and even Mr. Harper, have expressed about the prospects for a Greek financial collapse -- and contagion.

And it comes just one day after Mr. Papandreou again failed to unite opposition leaders behind a consensus for austerity measures -- a bid to reassure the IMF and European Union that there is broad support for austerity measures that ensures they will go ahead.

"I know from experience that it is not unusual for opposition parties to refuse to co-operate with the government," Mr. Harper joked. "But governments have a responsibility to act. And I certainly admire the determination of Prime Minister Papandreou, and the very difficult actions he's had to undertake in response to problems his government did not create. So we are very much all on his side."

Mr. Papandreou, head of Greece's socialist party, has chosen a restructuring plan that the Conservative Party would surely not favour at home: it includes sizable tax hikes to raise revenues and trim the deficit. But Mr. Harper stressed a message that taking steps to deal with the deficit is key.

The Greek prime minister, insisted the government has made substantial cuts to its deficit and exports are booming -- and will prove the "doomsayers" wrong.

"We've got a lot to do, still. We have a big privatization program. We've already taken decisions and we're implementing these in the next few weeks. Certainly more fiscal adjustments," he said. "My purpose and my determination is to continue this program."

Mr. Harper's expressions -- no doubt intended to reassure financial markets -- is a boost to Mr. Papandreou as he faces competing pressures.

Unions and political opponents at home have opposed austerity measures and the sell-off of Greece's extensive state-owned enterprises. But in other Eurozone nations, there has been fatigue at bailouts and criticism that Greece has not done enough to trim government pensions and benefits to retrench government spending.

A Greek default would increase fears of others in deeply-indebted economies in Portugal, Ireland, and Spain, that could shake the economies of the Euro zone. And Mr. Harper, when he hosted the 2010 G8 and G20 summits, was vocal in warning that such a debt crisis could trigger a new global financial crisis -- and urged world leaders to embark on measures to cut deficits.

His visit to Greece followed a two-day trip for talks at this year's G8 summit in Deauville, France, where worries about the possibility of a Euro-zone debt crisis persistently intruded on the formal agenda on global security issues.

"We all know, from the experiences of the last two or three years that we're in a global economy and serious economic problems in any part of the world, whether it's through financial institutions have an ability to impact all of us," Mr. Harper said on Saturday.

He said he's confident Greece will succeed -- he no doubt wants to reassure markets -- but also noted that his own plans to control spending growth to trim the deficit won't require such deep cutbacks. His new Treasury Board President, Tony Clement, the man responsible for identifying budget reductions, joined him on the trip to Athens, and Mr. Harper said the meetings in Greece should reasure him his challenge is not so hard.

"Minister Clement sat through those discussions with me, and if for no other reason, so I could assure minister Clement that as we tackle our own deficit," Mr. Harper said. "As you know we've said we certainly have to control the growth of expenditures going forward, but we have nothing like the challenges here in Greece. He has a comparatively easy task, and I want to assure him that he is more than up to it."

Follow on Twitter: @camrclark

 

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