Amazing! European Commission President Jean-Claud Juncker sat down and wrote several pages of a proposal to “help” Greece strike a deal with its creditors, unlock the impasse. allow the release of some bailout money to avoid default on June 5th 2015 and give time for a new deal in autumn.
Juncker’s memo has been reportedly distributed to all parties concerned and involved, the International Monetary Fund included that is most likely not going to like the proposal.
In the “Memo” leaked to To Vima newspaper, Jean-Claude writes down the conditions so that the EFSF funds Greece in June with the aim to be a comprehensive agreement by autumn.
Among others, Juncker’s proposals and conditions are:
1. Legislation of measures 5 billion euro to cover budget deficit for the years 2015 and 2016.
2. Implementation of the big ‘reforms measures’ in September and October. The measures are being included in OECD’s kit and refer mainly in changes in the social insurance and labor market.
3. Primary Surplus target for the next four years (2015-2018):
2015 – 0.75% of GDP
2016 – 2% of GDP
2017 – 3.5% of GDP
2018 – 3.5% of GDP
Measures worth €5 billion demanded for 2015-2016:
– Value Added Tax reform and hikes (most probably to be implemented as of 1. October 2015): flat V.A.T. of 18% but 15% on payments with credit card, and keeping the low V.A.T. of 6.5%.
– Solidarity Tax increase for all annual incomes above 30,000 euro.
– Keep the Unified Property TAX (ENFIA)
– The Clause of “zero deficit” to Supplementary Pensions Funds will not be implemented but it will be reconsidered in autumn when talks about insurance funds sustainability.
– Collective bargains will be reconsidered in terms of ILO report about “better practices” in labor relations in the EU, the need of increase of competitiveness of the Greek economy and to tackle the huge problem of unemployment.
-Measures to tackle the Humanitarian Crisis and provide a safety net for the “les privileged”.
-Independence of the General secretariat of Public Revenues.
and most likely also some more…
In his memo, Jean-Claude Juncker considers that the following funding will be given to Greece by June:
– the outstanding bailout tranche of €1.5 billion
– the amount of €1.9 billion from the Bonds profits of 2014 (SMP Program)
– the amount from the bonds profits of 2015 and to be given to Greece in July.
“Juncker’s proposal has been allegedly already in the hands of Greek government and has been reportedly distributed to all persons and institutions (ECB, IMF) involved, To Vima notes adding that “within the next days or even hours the EuroWorkingGroup members will commence to take their decisions.”.
It is funny though that some EU departments declared to have no idea about Juncker’s proposal to Greece.
@EU_Commission Spokesperson for Jobs, Growth, Investment, EMU and the European Semester
Can’t confirm media reports on
@EU_Commission /Juncker proposal on GR. Not aware of such proposal. Working towards comprehensive deal.
Anyway, the IMF does not seem to share Juncker’s joy about the proposal and according to To Vima, it stated that these measures, conditions and plans would need new studies. – You know… the IMF-staff has to verify Juncker’s projections with the notorious wrong multipliers the IMF-staff uses to add 2+2 and multiply by 1.34562% and wonders why it comes out 3.5 –.
I also do not think that neither German Finance Minister Wolfgang Schaeuble nor Eurogroup head Jeroen Dijsselbloem would like the option to give a cent to Greece before the debt-ridden country agrees right now to all their demands, implementation included. It was the famous duo Schaeuble-Dijsselbloem who had rejected Varoufakis’ request to return the €1.9 billion from the SMP program.
On the other hand, I have no idea yet about the attitude of the Greek Government towards the plan demanding austerity measures worth 2.5 billion euro for each 2015 and 2016.
I remember very will, that Samaras’ government failed to reach an agreement with the Troika in November 2014, when it proposed measures of little below one billion euro, arguing that the Greeks had been financially exhausted.
And if you ask me, an average Greek, I can tell you the following:
– with ENFIA taxes based on no more realistic commercial values of properties, I am not willing to pay even a euro on property tax.
– V.A.T. hikes: the VAT for my soft drinks may come down from 23% to 18%, but all food items will skyrocket from 13% to 18%.
– “reforms” of the already crashed labor rights and ridiculously decreased wages for the improvement of competitiveness? In 2012, the minimum wage fell down to €580 gross (€445 net) from €780 previously. Growth and development and competitiveness are still awaiting to be spotted behind a Greek island or something.
With the exception of the humanitarian crisis measures the rest on Juncker’s proposal is the usual austerity Greece’s lenders have been demanding since autumn 2014.
Austerity and Troika-Institutions’ demands remain the same, without concessions of any kind. For example, I see no relief for the zero- or low-incomers who have been taxed like crazy since 2011. I see no constructive proposals for the the health sector that burdens the poor more and more. I miss a plan to allow growth and development.
So, what’s the point of Juncker’s “revolutionary” proposal?
1. An intermediate payment of €1.5 billion bailout tranche to Greece that it will not help it meet its obligations towards the lenders in summer.
2 Continuation of strict austerity and comprehensive agreement in full speed in autumn.
3. Four lost months of “negotiations” and Greek citizens on the verge of a nervous breakdown.
Three days ago, Prime Minister Alexis Tsipras announced the Greek Government’sFour red lines “do not fade away” due to lenders’ p0ressures. HE named the four as:
– Low Primary surpluses (Juncker satisfied it for 2015 and 2016).
– No further cuts in wages and pensions (Jean-Claude!?).
– Discussion for debt restructure (Hellooo! JC!)
– Strong package for public investment especially in infrastructure and technology (Jean-Claude, are you there?)
Awaiting the response of the Greek government. 🙂
But most probably there will be no response. Greek Finance Ministry dismissed the news and FinMin sources said that “no proposal for agreement has been submitted by the Commission.” Some TV journalists claimed that it was just a “non Paper” – or a bad joke, KTG would add.
PS meanwhile some wonder on social media why not a tiny photo of a single sentence of Juncker’s draft memo has been seen around ….