More austerity, more work and more measures. that was the slogan of Friday’s Eurogroup on Greece. An agreement between the two sides was not on the agenda. It was just talks to force the Greek government accept the conditions of the International Monetary Fund for an extra package of 3.6 billion euro “contingency measures” – 2% of GDP – for the case the debt-ridden country will not meet the third bailout targets in 2018 by implementing a 5.4 billion euro austerity.
This saving of 2% of GDP is the difference between Greece’s European lenders and the IMF with regards to Primary Surplus for 2018. The Europeans forecast 3.5%, the IMF says this target is to high and cannot be achiedved without further austerity. And BANG! Here you get the deal package. Nine billion euro for the next three years.
Despite Greece’s Primary Surplus 0f 0.7% of GDP for 2015 and the recent statements by European Commission President Jean Claude Juncker that “Greece would need less contingency measures”, despite reports that the extra IMF package would be 3 billion euro, at the end of the Eurogroup day, the Greek team left the hall assigned with the homework duty to prepare a package of additional savings measures which would be passed into law now but implemented only if needed, to make sure the country reaches agreed fiscal targets.
“We came to the conclusion that the policy package should include a contingent package of additional measures that would be implemented only if necessary to reach the primary surplus target for 2018,” Eurogroup chief Jeroen Dijsselbloem said during a press conferences in Amsterdam after the meeting adding that the extra contingency measures need to be “credible, legislated up-front, automatic and based on objective factors.”
Finance Minister Euclid Tsakalotos told reporters that Greece can not legislate “contingent measures” as the Greek law does not allow it. But Dijsselbloem and the rest of the eurozone finance ministers who agreed upon the new burden on Greeks’ shoulders are confident that a way can be found.
“We need to work on how that mechanism is going to look like. Of course if there are legal constraints we can’t and won’t break legal constraints. We will design it in a way that delivers credibility …and (is) legally possible.” so Dijsselbloem.
What measures this “contingent package” will include is not clear yet. What is clear is that the 5.4 billion euro measures package of the European lenders includes thorough Pensions Reforms, a new income taxation system – Tax system Nr 6 or 7 since 2010 -, hikes in indirect taxes – VAT to rise from 23% to 24% -, extra fees and charges, a special scheme for red and green loans, as well as the establishment of a new privatization fund what will sell off everything owned by the state.
One could start wondering, what will be left for the IMF’s contingent package of 3.6 billion euro to contain: Emptying households pantries? Seizure of private washing machines and fridges? Starving of elderly? Deprive chronic-ill from medication?
An extraordinary Eurogroup meeting is scheduled for next Thursday, April 28th, with the European partners awaiting for Greece to have found a formula by then on how to bypass political, legal and constitutional obstacles in order to vote IMF’s extra package. And, of course, to have found a way to convince its 153 SYRIZA-ANEL lawmakers to vote in favor of the package. Not, that the lenders do care about whether they will continue their Conquest way through Greece with Tsipras or somebody else. SYRIZA MPs are reportedly awaiting for an official briefing by Tsakalotos.
Both Prime Minister Alexis Tsipras and Eurogroup chief Jeroen Dijsselbloem reject claims that IMF’s extra package is a “fourth Bailout.” Of course, it is not. The extra package will not give Greece extra money, it’s only that Greece will have to take more measures. In this senses, it’s not a “4. bailout”, it is “the 3. bailout + more measures than those agreed upon last summer between Greece and its european lenders.”
Once Greece and lenders agree on the 9 billion euro mearuses for 2016-2018 next Thursday, the set of contingent reforms – €3.6 bn – , together with measures – €5.4 bn – already under negotiation, would enable the disbursement of new loans to Athens and pave the way for debt relief. A debt relief “light” as German DER SPIEGEL writes on Saturday.
Citing an internal memo of the German finance Ministry, Der Spiegel notes that Berlin may agree to a debt relief light once Greece agrees to the extra contingency measures. This Schaeuble’s “Light” plan allegedly foresees “extension of Greek loans for many decades and stabilization of low interest rates.”
With Lagarde’s narcissism and Thomsen’s mannerism, the IMF managed to have imposed its approach to Eurozone. Didn’t Poul Thomsen, who is in charge of the European Program, write in his IMF-Blog on February 12th 2016 that Greece would need saving measures worth 7.5-9.5 billion euro (4%-5% of GDP) in order to secure primary surplus of 3.5% and “sharp cuts in pensions”? Of course, he did!
The IMF has a loyal comrade, Dr Schaueble. They both played the game and won. The rest (Dijsselbloem, Juncker) are just acrots in 4th class roles…
A side-note: the IMF’s extras will be decided to be implemented in 2017, not after the end of 2018.
PS at the very end, whatever the match… Schaeuble always wins. He simply wants to get rid of Greece.
You must pray that BREXIT will happen and EUROZONE will die in two weeks thereafter
If the EU collapses, the Latvians will also miss their freebies.
Latvia joined EU expecting prosperity but earned total misery. As a result of banking crisis and EU bailout policy imposed by Angie, the cumulative loss for Latvia is 103% of GDP, or 40 times the EU support through cohesion policy.
In the 1990-ies there were major banking crises, but no bailouts, and as a consequence, the effects were minimal. For 1995, year of major banking crisis in Latvia, the GDP change in Latvia even did not drop to negative. Because there were no bailouts, the costs for society and economy were very low.
As a consequence of Angie-induce unconditional bank bailouts imposed on Latvia, as the second biggest PAREX bank in 2008 suddenly was completely empty (the assets were transported outside Latvia even with regular flights, when a sack with banknotes and gold accidentally ruptured), the GDP fall in 2009 was -25%.
The Greeks would be well advised to look closer on Eastern Europe’s recent history, from the Leftist prism, as in the population there are many victims of Grand Recession and bank bailouts, which want to see the Angie in jail or sent to Chile.
Are you sure that without the EU the situation would be much better ? I dare doubt – especially looking at Ukraine, Moldova and Belorussia. Russia can some day be better because of enormous natural resources, but it is not… When I compare Romania and Moldova, Romania is much better and the starting point was probably similar.
Of course, we must differentiate the EU and euro – I agree that for many countries euro was a disaster. But Latvia was free to accept or reject euro. Czech Rep., Romania, Hungary, Poland etc. still keep national currencies.
All in all, I think that the EU membership was a big blessing for ex-communist countries not only by itself. Preparing to this membership, these countries had to accept democratic values, introduce independent courts and stable institutions, guarantee safety of property – what positively influenced development. Their citizens got very good passports allowing going almost everywhere and right to work in very rich countries. Ukrainians, Moldovans etc. did not have it. Are they really better off ? I am really terrified with probability of EU disruption…
In fact, there has been never before such a corruption and bribery in Latvia as now.
First, the message from the Crisis was – follow your own narrow interest with absolute ruthlessness. Angie has demonstrated it very well. Germany apparently expected breakup of EU in 2010 and therefore they pressed everything out of others while staying very selfish on their own.
Second, the VAT carrousels in the EU are robbing 30% budget of Latvia. And this is clearly consequences of EU, as before there was no cross-border VAT. Guess, who is against tax transparency, as turned out on Friday Eurogroup? The Wolfgang, of course. Because cars and electronics are the goods involved in 70% of carrousels. And Germany enormously profits from those carrousels. But small EU countries get robbed.
Don’t worry the private EU company David Cameron has commissioned to count the votes will announce REMAIN whatever happens.
Latvia will continue to get its freebies & Latvian government will stay on the pocket-lining EU payroll, while ordinary Latvians continue to starve & emigrate to UK where they can work at the worst jobs or be prostitutes.
I am sometimes totally astonished, why many people from ex-communist countries take massively money from the EU and wish its destruction at the same time. Is Russian control really much nicer ? Many days ago I criticized Tsipras and thought that he would not succeed – and probably I was at least partially right. But this self-destructive wish in ex-communist countries is more dangerous than all Greek mistakes in last 16 years…
See above
During the EU-badly-managed financial crisis and unconditional bank bailouts EU-13 countries have lost income in order 40-50 times more than all the alms received from Brussels for the past 10 and next 30 years.
If Latvia did not make any bank rescues to the benefit of the EU, it could stay out of the EU for the next 40 years and be still much better off.
Actually, for Greece all the debt burden loaded on it is 40-50 times bigger than any donations it got from Brussels.
Common market is a profit source only for large car builders, none of them located in Baltic or Greece. Small countries will never benefit from a common market.
So then boycott and destroy car builders, cars are terrorists, climate-fascists and finance ISIS, in fact that cars are still allowed and driven should be charged like terrorist organisations; an Anti-car party will gain 10% in many countries.
bicyclists’ delirium :p
Not only, xaxa, Loukanikos didn’t die of tear-gas alone, many have cancer and die early, playing children, animals and grannies also need safe streets.
We don,t take massive amount of money….EU destroyed our industry our farming and robbed everything . And now EU robbing still us like hell and then throws something back with insult that we getting “help” Last time we got this type of help was in the Gulag. Good Soviet Union supplied people in the Gulag with job, free food and housing. And place in the mass grave was also free. EU isn,t helping anybody, it,s pure evil, it must be overtaken and destroyed and that what we do. And EU ends in Nurenberg. 1917 it started and now it ends. Century of evil will be over soon.
They just carry on doing what they did with the Soviet bloc. It’s a collection of mindless cultures that have no vision, no concept of collaboration, no dream of a common European home, just endless whining about everyone else.
What I don’t understand is why so many of these countries after the fall of a union they didn’t wanted to be in then can’t wait to give their newly won sovereignty away again by joining another ailing union. The EU is a capitalist Yugoslavia. We all know what happened to Yugoslavia.
Well…desorganized opposition versus Soros paid well oiled enslavery machine. Before widespread internet it was very difficult to debunk media lies. When the USSR went down, people thought that they are now free and lost awarness. Nobody told us that we lose everything and will be genocided by anthropological weapon.
But thats doesn,t matter anymore. Now we are fully awake and finish off the cultural marxism as we did with Soviet Union. And this time communists don,t get away.
EU btw is not capitalist. In capitalist society market will deside. Not ideological comissars. Try to sell book in Germany, that homosexuality is cureable disease, different races are different IQ, climate warming is a hoax, also holy cowst and you will see is the market who deside your success or something else…:D