European Commission Threatens Greek Voters With Next Bailout Tranche

The external interventions on the Greek election process do not come to a halt. The European Commission threatened anew the Greek voters saying that the release of the next bailout tranche will very much depend on the outcome of the June 17 elections. 

The commission and IMF review of Greece’s eligibility for the next disbursement of aid depends on the outcome of the June 17 election and is provisionally scheduled to take place in “late June/early July,” according to EC today’s report.

The next Greek government must pursue budget cuts with “determination” to be eligible for emergency aid, warned the European Commission, which said it may review progress two weeks after Greece’s June 17 elections.

Below the EC report as posted by BusinessWeek

The message highlights the limited room that Greek politicians will have to renegotiate fiscal-austerity conditions tied to international aid. Greeks return to the polls next month after an inconclusive May 6 vote catapulted a party opposed to the rescue terms into second place, raising concerns that Greece may have to abandon the 17-nation euro.

Greece, which has struggled to meet targets for narrowing its budget deficit while receiving aid pledges of 240 billion euros ($299 billion) over the past two years, faces a cumulative fiscal gap in 2013-2014 of 5.5 percent of gross domestic product, according to the commission.

“Greece will therefore have to make substantial additional expenditure cuts in the coming months,” the commission, the European Union’s executive arm in Brussels, said in a report today. “Comprehensive international financial assistance can continue to be provided only if policy implementation improves.”

The report, part of an annual assessment of budget programs across the 27-nation EU, lists shortcomings by Greek authorities in enacting an economic overhaul first outlined when Greece got an initial 110 billion-euro rescue from the euro area and the International Monetary Fund in May 2010. A second 130 billion- euro loan package, coupled with the biggest writedown of privately held debt, followed this year.

‘Insufficient Progress’

The commission cited “insufficient progress” by Greece in bolstering tax collection and improving public procurement and said the sale of state-owned assets has been “slower than planned.”

Such shortcomings have increased skepticism in euro nations such as Germany, the Netherlands and Finland about aiding Greece, while a Greek recession in its fifth year has made domestic voters critical of the fiscal-austerity demands.

Greece narrowed its deficit from more than 15 percent of GDP in 2009 — five times the EU limit — to 9.1 percent in 2011. The country’s spending gap is due to fall to around 7 percent of GDP this year.

Most Greeks want to see the financial-rescue terms revised while acknowledging that failing to abide by them may result in the country leaving the euro, according to a Greek opinion poll broadcast today on Mega TV. Syriza, the party that came in second in the May 6 election, says its wants to alter the bailout conditions while keeping Greece in the euro.

The commission and IMF review of Greece’s eligibility for the next disbursement of aid depends on the outcome of the June 17 election and is provisionally scheduled to take place in “late June/early July,” according to today’s report.

The determination of the Greek authorities to stick to the agreed policies will be tested in the coming months when deficit-reduction measures to close the large gap for 2013-2014 need to be identified,” the commission said. “Implementation risks will remain very high. The success of the second program depends chiefly on Greece.”

To tell you the truth I have never experienced so many blatant interventions in the democratic process of a souvereign country as in case of Greece. Not one similar example in my 25 years of journalism…

in typical grandeur posture ….

PS  Wasn’t it King of France Louis XV saying “Avec Tsipras le déluge“?