Like in all good old fairy tales, the meeting of Troika and Greece’s representatives in Paris had a dragon. A dragon spitting fire and generously distributing slaps in the face of the team sent by Samaras-Venizelos coalition government to negotiate with the country’s lenders the bailout exit.
Aim of the meeting was a meeting point between Troika’s demands and Greek government options in order to open the door for the Troika to visit Greece and start the much wanted review in order to facilitate the release of the next bailout reimbursement.
The negotiations failed. The Troika saw a fiscal gap of 2.5 billion euro for 2015 and demanded further reduction in pensions, increase by 10% to 13% Value Added Tax as being applied on the islands and additional taxes.
The Greek government could and cannot accept these demands as it already over taxes even the poor and the unemployed and the low-pensioners of a society left with empty pockets after five years of the strictest austerity measures possible. And furthermore, struggling to remain its power position, Greek government in general and PM Samaras in particular have been heralding for the last three months, that “the bailout conditions are over,”, “growth in on they way,” and other nice things politicians are very good in promising.
The two-day long, two-party marathon in Paris ended without agreement. Winner is as usual the Troika, the Greeks packed their things and returned to Athens with hanging heads.
What’s next? Deputy PM Evaggelos Venizelos told reporters after a meeting with PM Antonis Samaras this morning that “the Greek program could be extended.” However he stressed that the extension will “not be done with a new loan” as statements from EU and German officials had claimed last September and were mentioning an additional bailout of some 10 billion euro. And additional austerity measures, of course.
Venizlos said further that a short extension for “technical reasons” could occur and expressed the hope, that the last reimbursement could be released by 31. December 2014.
According to Wall street Journal, the extension could be “a six-month extension of Greece’s current program, one eurozone official said.” That is more or less late spring or early summer 2015, while the bailout program was foreseen to last until “March 2016.”
Defeat for PM Samaras
Τo tell you the truth, I am not that keen to explain Venizelos’ “technical reasons” blamed for the delay and there are maybe much too clear and obvious to need an explanation.
The real problem for the Greek government after Paris failure is purely political. It is a personal defeat for PM Antonis Samaras and his “success story – we exit the bailout” campaign It shows to voters for one more time that the government is powerless against the Troika’s demands, that the bailout extension is inevitable and that the possible pension cuts and VAT increase will put another brick in the recession wall of a society that can take not more.
It shows also the government cannot prove its long claimed “success story” and “we exit the bailout,” win the next President’s election and avoid snap polls.
Now the government will find it even more difficult to convince independent lawmakers to take its side and vote for the country’ next President thus prolonging the life expectation of the coalition. But also it can find it difficult or impossible to convince its own lawmakers to vote for additional austerity measures or pension cuts or whatever it comes to Troika’s mind.
Of course, at the very end things may change, the coalition will survive, the next President will be elected by the current Parliament… then Greece is always good for surprises.
If it wasn’t for this main opposition, left-wing SYRIZA that leads to all public opinion polls and moreover it demands early elections in a monotone voice. “Early elections are necessary and inevitable,” SYRIZA leader Alexis Tsipras told protesters during the anti-austerity rally, on this grey and melancholic day after the meeting in Paris.
PS needless to mention that the Athens Stock Exchange is down and the Greek Bond Yields up.