Greeks overjoyed by bailout deal

Mired in recession and deepening poverty, Greece hailed the Brussels deal as a historic step that offered the first glimpse of hope in a crisis that has dogged the country for 18 months. After relentless bad news and unprecedented austerity, Greeks welcomed the EU decision to throw the debt-stricken nation a second financial lifeline of such colossal proportions, said the prime minister, George Papandreou. "Our people have been released from the nightmare of bankruptcy," the socialist leader enthused before explaining the finer details of the complex €109bn (£96bn) rescue plan to his cabinet ministers. "We were on the verge of the abyss but we didn't waver. We made big sacrifices but they didn't go to waste. We achieved historic decisions. Europe took a historic step forward." Under the agreement, which supplements last year's €110bn package of emergency loans also co-sponsored by eurozone nations and the IMF, Athens now has assured funds to service its €340bn debt until 2014. After a depressing winter and protest-packed summer and spring, the news was greeted with barely disguised relief even by some of Papandreou's staunchest enemies. Antonis Samaras, the conservative opposition leader – while describing it as an "admission" of the failure of Athens' first bailout and the painful policy of pursuing growth through austerity in exchange for aid – praised the new loans' longer maturities and reduced interest payments. Low-income earners, who have seen their wages slashed by up to 40%, said they hoped the new lifeline would help rejuvenate the economy. "Maybe some of the shops will open again if there's more liquidity in the market," said Stelios Karaoglou, a pensioner, pointing to a row of shuttered stores. Better still, said others, the country had not had to hand over the Parthenon or any of its islands as collateral. "We seem to have cut an agreement without accepting to give away more," said Vali Kyriakopoulou, railing against the sale of state assets Athens has also pledged in exchange for further aid. Although Greece will be in temporary default following the bailout – the Fitch ratings agency to slap a "restricted default" status on it within hours of the package being announced – Papandreou insists the new injection of cash will provide breathing space to implement long-overdue reforms. The changes are essential to not only improving Greece's notoriously low levels of competitiveness, but kick-starting an economy now on its knees. "Greeks are thirsty for change," he told the country's president, Karolos Papoulias. "Now at last, the time has come to continue with the big changes that open the way for real prospects for the younger generation." But the challenges are far from over. Starved of cash, Greece's real economy is experiencing its worst crisis since the second world war. The lack of liquidity, or genuine development, has plunged the country into a vicious cycle of spiralling debt. "The new package solves the issue of debt sustainability and gives us the certainty that we lacked before, but the liquidity problem is huge," Michalis Chrysohoidis, the minister for regional development and competitiveness, told the Guardian. "It absolutely has to be solved because it is like a slow death," added the politician, who estimated that Athens' total debt burden, set to hit 160% of GDP next year, would fall by about €60bn to €70bn as a result of the new programme. Greece's promise to enact reform in return for the aid will not be easy, either. A five-day strike by taxi drivers protesting against government plans to deregulate the trade has highlighted the difficulties Papandreou will face. The drivers, whose actions blockading ports and airports nationwide have wreaked untold damage on tourism – one of the few hopes for economic recovery – have vowed to strike indefinitely until the socialists back down. With holidaymakers caught up in the chaos Athens' supreme court stepped into the row on Friday, threatening to put drivers who obstructed roads before "express" tribunals, in addition to confiscating their licence plates. The 30,000-strong sector argues that liberalising the profession would be a huge blow when most drivers have paid as much as €200,000 for licences. Thymios Lyberopoulos, president of the federation of Greek taxi drivers, said: "We will continue this fight. We will stop paying VAT, we will stop paying our loans, we will do whatever it takes until the government stops this unfair legislation."