For thirty years, with the exception of the United Kingdom in 1976, structural adjustment was only for lesser development nations. The United States, Japan and the European Union preserved more generous salaries and benefits for workers, as well as social welfare programs. But that division is now coming to an end:

Prime Minister George Papandreou said Sunday that Greece had reached an agreement with the International Monetary Fund and the European Union on a long-delayed rescue package that is expected to be worth as much as €120 billion. The deal aims to help the country avoid debt default and prevent economic contagion from spreading throughout the region.

Greece’s finance minister, George Papaconstantinou, at a news conference in Athens on Sunday.

In a televised statement to the nation, Mr. Papandreou urged Greeks to accept “great sacrifices” to avoid “catastrophe.”

“I have done and will do everything not to let the country go bankrupt,” he said, appearing sober and resolved in front of his cabinet and appealing to Greeks to show patriotism at a moment of deep crisis. “I want to tell Greeks very honestly that we have a big trial ahead of us.”

He signaled that public-sector employees would see their salaries further reduced, while pensions for retired civil servants would be scaled back. He said members of Parliament would do without their bonuses. He added that in tough negotiations with the International Monetary Fund, the European Union and the European Central Bank, the government had succeeded in avoiding cuts to private-sector salaries.

Public reaction was predictable:

Athens erupted into violence as traditional May Day festivities turned into a bitter protest against draconian austerity measures aimed at tackling Europe's worst debt crisis in decades.

For the tens of thousands of demonstrators who took to the streets in rallies that quickly descended into clashes with riot police, the show of force was just the beginning – a prelude of the storm that will rock Greece if its Socialist government "caves in" to the dictates of the IMF and enforces policies that have been likened to "the coming of Armageddon".

To make the point, scores of stone-throwing youths chanted "people don't bow down, it's time again for revolution" as a petrol bomb set fire to a police officer in the heart of Athens.

"They say the only way of salvaging our economy is more austerity, but that's a total lie," said Nicolaos Danizis, a 60-year-old shipyard worker participating in a Communist-led demonstration outside parliament. "These latest measures have been cooked up by outsiders and are totally outrageous. They are aimed not at the rich but at the poor. What we are saying here today is that they will pass only over our dead bodies."

As one protester explained:

"The IMF deals with injustice. It never targets the rich, who have deposits abroad and luxury cars and are buying properties in London. It always targets the poor," said Maria Koumoundourou, a retired bank employee as she joined the marchers. "Its involvement in our affairs is truly offensive and very worrying. It has made us very angry."

It is hard to imagine how these measures can be put into effect without forcing Greece out of the EU. For a photo gallery of the protests in Athens, go here.

It is easy to blame the Greeks, after all, bankers are very good at blaming their borrowers for their own excesses, but there is more to it:

It is tempting to view the Greek debt crisis as an isolated example of national profligacy and financial ineptitude from a country that should never have been allowed to join the euro. With a record of economic mismanagement and political instability – not to mention a propensity to "cook its books", if you believe the country's most vocal critics – it is hardly surprising that Greece has been forced to seek an international bailout.

But that analysis is probably unfair to Greece, whose excesses are only a few notches higher than other developed nations. And it misses the wider issue of a sovereign debt time bomb that stems from the credit boom of 2003-7.

After all, it was French, German, Dutch, British and Swiss banks that happily bankrolled Greece's debt-fuelled binge, one that has landed the country with the highest debt-to-GDP ratio on the continent and which lies at the heart of the country's woes today. Of course, Greece's own banks have played a big role in all this as well.

And where does it stop? Spain? The United Kingdom? The United States?

Labels: Anarchism, Europe, Germany, Global Recession, Greece, IMF, Neoliberalism