Greece is trapped in bailout talks with the creditors taking place in Brussels. The reforms list the Greek government submitted to the creditors is considered to be on “positive basis” but not sufficient enough. The lenders want measures with “stable performance and specific results”, that is austerity measures with immediate fiscal revenues like, mass lay-offs, VAT hikes also in food and medicines, privatizations, cuts in wages and pensions.
But the SYRIZA-led government is trapped between the lenders’ demands and the objections of leftist fraction in own party, it is trapped by the commitments of the previous government to the lenders. While the promises it made to its voters currently seem to be the less problem.
Creditors stuck to dead-end austerity
The Institutions insist on further austerity and cuts and put pressure for “pension cuts, wages decreases, overhaul in labor issues.” No to mention the creditors’ NAY to Greek plans like abolishing the Unified Property tax (ENFIA), or increase the tax-free annual income to 12,000 euro, or even higher, rehiring of laid-off civil servants, minimum wage increases and other promises made by SYRIZA before the elections.
Alternate Finance Minister Dimitris Mardas told media this morning, that German Chancellor Angela Merkel told Prime Minister Alexis Tsipras on March 23rd in Berlin that he had to proceed with “mass lay-offs and pension cuts.”
The creditors do not show willingness accept the Greek reform list that practically contains no “austerity measures” but target revenues collections.
They don’t accept the revenues estimations from the tax evasion measures and tax avoidance and other measures like increase Value Added Tax in islands like Mykonos and Santorini, property tax only to properties with big value and other measures the Greek government thinks to increase revenues.
However, for Greece’s government, pension and wages cuts are out of question and so are interventions in labor issues like mass lay-offs.
What it becomes clear at this point is that while the new Greek government tries to “make the difference” and approach the debt issue, fiscal gaps and debt repayment options in a austerity-relaxed way, the Institutions of IMF, EU and ECB insist in the old recipe of strict austerity. A recipe that has proven to have failed so far.
Greece running out of money
The Greek proposals package has measures worth some 3 billion euro for 2015. An agreement with the creditors would unlock the whole or part of the last bailout tranche of €7.5 billion.
A disagreement would be catastrophic with Greece’ debt obligations for April to amount some 3 billion euro. The country needs to pay
€448 million to IMF (April 9th)
€1.4 billion in refunding 6-month T-bills (mature April 14th)
€1 billion in refunding 3-month T-bills (mature April 17th)
Another one to two billion euro would be needed to pay wages and pensions.
Last week a rumor claimed that the ECB had forbidden Greek banks to buy T-bills and keep on funding the government. That is the ECB has cut any financial lifeline for the Greek government.
Traps around the government
For the moment, the gap between Greek government and creditors seem unbridgeable, the distance is huge.
So what happened to the Eurogroup agreement of February 2oth? Was it just a hole in the water? An ostensible agreement where on paper both sides agreed but in substance the Euro-partners had something else in mind, that is the continuation of old path of strict austerity?
The Institutions’ objections at the Brussels Group talks confirm this in a way beyond any doubt. In fact, the creditors demand the implementation of the commitments of the previous government as stated in the famous e-mail of Samaras’ Finance Minister Gkikas Hardouvelis.
In an 48-page e-mail sent by Hardouvelis to Troika on 29. November 2014, Samaras’ government was committed to proceed with further austerity measures.
The trick of the email was that
1. the e-mail was sent at a time when it was certain that the country was heading to early elections
2. the e-mail of the previous government holds the new Greek government in captivity.
KTG already pointed to this option in an article criticizing the creditors’ inflexibility during the Eurogroup of February 18th.
At the same time, PM Tsipras faces also an internal opposition with the Left Platform of Dimitris Lafazanis to urge for a rift with the “German Europe”.
Of course, if the voters wanted “rift with Europe” they would have voted in favor of the Communist KKE, right?
Creditors’ faked agreements
One and a half month later, we realize that Greece and the creditors are exactly at the same point despite the February 20th agreement and the seemingly good deals at the mini EU leaders summit with PM Tsipras on March 19th.
Now the creditors blame Greece for having done little or nothing during the last weeks. However, we realize that at the very end the creditors have not moved an inch away from their initial and stiff position of the non-stop and dead-end austerity.
Tsipras last card?
As the Brussels talks are at crucial point again and Monday is the last day of the talks before the Catholic Easter vacations, Prime Minister Alexis Tsipras has called for an extraordinary Plenary Session at the Greek Parliament with the presence of the leaders from all parties.
Alexis Tsipras is reportedly going to inform the Parliament about the negotiations talks, and ask the opposition to take position towards the governmental legislation work, the past and the future.
In fact, PM Tsipras is going to ask the support of the opposition as he faces a crucial dilemma: rift with the creditors or rift with the left fraction of his own party.
Rift with creditors could mean snap elections as the Prime Minister would need to refresh the public mandate for whatever Greece’s future would be.
Rift with the left fraction could mean that the Left Platform leaves the government and that the Prime Minister would need to proceed to a coalition with To Potami, for example, in order to keep the parliament majority. that would especially please Germany and the Social Democrats who have supported the small party of vague and fuzzy policies.
PS the blackmail pattern makes a lot of sense, right???