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Odd “transparency”! European Commission releases Creditors’ proposal to Greek Gov’t

In an quite odd movement, the European Commission decided to release on Sunday, the creditors’ proposals it offered to the Greek government on 26. June 2015, that is before June 27th 2015, the Friday’s Eurogroup meeting.

EC prior actions

The publishing of the creditors’ proposals are “in the interest of transparency and for the information of the Greek people” the EC says in statement accompanying the 10-page document.

Excerpt: 2. VAT reform
Adopt legislation to reform the VAT system that will be effective as of July 1, 2015. The reform will target a net revenue gain of 1 percent of GDP on an annual basis from parametric changes. The new VAT system will: (i) unify the rates at a standard 23 percent rate, which will include restaurants and catering, and a reduced 13 percent rate for basic food, energy, hotels, and water (excluding sewage), and a super-reduced rate of 6 percent for pharmaceuticals, books, and theater; (ii) streamline exemptions to broaden the base and raise the tax on insurance; and (iii) eliminate discounts, including on islands.
The increase of the VAT rate described above may be reviewed at the end of 2016, provided that equivalent additional revenues are collected through measures taken against tax evasion and to improve collectability of VAT. Any decision to review and revise shall take place in consultation with the institutions.

European Commission – Press release

Information from the European Commission on the latest draft proposals in the context of negotiations with Greece

Brussels, 28 June 2015

In the interest of transparency and for the information of the Greek people, the European Commission is publishing the latest proposals agreed among the three institutions (European Commission, European Central Bank and International Monetary Fund), which take into account the proposals of the Greek authorities of 8, 14, 22 and 25 June 2015 as well as the talks at political and technical level throughout the week.

Discussions on this text were ongoing with the Greek authorities on Friday night in view of the Eurogroup of 27 June 2015. The understanding of all parties involved was that this Eurogroup meeting should achieve a comprehensive deal for Greece, one that would have included not just the measures to be jointly agreed, but would also have addressed future financing needs and the sustainability of the Greek debt. It also included support for a Commission-led package for a new start for jobs and growth in Greece, boosting recovery of and investment in the real economy, which was discussed and endorsed by the College of Commissioners on Wednesday 24 June 2015.

However, neither this latest version of the document, nor an outline of a comprehensive deal could be formally finalised and presented to the Eurogroup due to the unilateral decision of the Greek authorities to abandon the process on the evening of 26 June 2015. (source:

The 10-page document is at the bottom of the Press Release in Adope in List of Prior Actions -Version 0f 26. June 2015

Excerpt: 4. Pension reform
The Authorities recognise that the pension system is unsustainable and needs fundamental reforms. This is why they will implement in full the 2010 pension reform law (3863/2010), and implement in full or replace/adjust the sustainability factors for supplementary and lump-sum pensions from the 2012 reform to achieve equivalent savings and take further steps to improve the pension system.
Effective from July 1, 2015 the authorities will phase-in reforms that would deliver estimated permanent savings of ¼-½ percent of GDP in 2015 and 1 percent of GDP on a full year basis in 2016 and thereafter by adopting legislation to:
 create strong disincentives to early retirement, including the adjustment of early retirement penalties, and through a gradual elimination of grandfathering to statutory retirement age and early retirement pathways progressively adapting to the limit of statutory retirement age of 67 years, or 62 and 40 years of contributions by 2022, applicable for all those retiring (except arduous professions, and mothers with children with disability) with immediate application;  adopt legislation so that withdrawals from the Social Insurance Fund will incur an annual penalty, for those affected by the extension of the retirement age period, equivalent to 10 percent on top of the current penalty of 6 percent;
 integrate into ETEA all supplementary pension funds and ensure that, starting January 1, 2015, all supplementary pension funds are only financed by own contributions;
 better target social pensions by increasing OGA uninsured pension;
 Gradually phase out the solidarity grant (EKAS) for all pensioners by end-December 2019. This shall start immediately as regards the top 20% of beneficiaries with the modalities of the phase out to be agreed with the institutions;
 freeze monthly guaranteed contributory pension limits in nominal terms until 2021;
 provide to people retiring after 30 June 2015 the basic, guaranteed contributory, and means tested pensions only at the attainment of the statutory normal retirement age of currently 67 years;
 increase the health contributions for pensioners from 4% to 6% on average and extend it to supplementary pensions;
 phase out all state-financed exemptions and harmonize.

Now what is this? A move by the European Commission to pick up the negotiations or a move to undermine the Referendum? Or just make it easier for Greek English-speaking voters to decide for YES or NO next Sunday?

I suppose, the EC should have translated the document into Greek, n’ est pas?

PS I must admit it reminds me a little be of the Cold War tactics when Radio Free Europe was addressing the people in the communist states and airplanes were throwing leaflets over red villages. so according to slogan “Greek people! Greek people! Your government is lying to you!”. I’ve seen such tactics in the movies …


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  1. “Now what is this?”
    Textbook transparacy – that’s what it is.
    People talk about the Creditors (last) proposal – they release it so everyone can make up their own mind whether it was fair or not.
    Of course there are people that can put a negative spin on any move I suppose…

    • I think this document will have value for the historians. For a while now (definitely, more than a week) both negotiating parties have been making their proposals and counter-proposals public. Presumably, this was done to win in the court of public opinion and/or to keep anyone interested informed. In particular, Varoufakis has been active in the blogosphere from before he became a minister. For example, on June 18 he published his proposal to the Eurogroup:

    • Based on this publicity, we could see how this week the two positions have been converging over the last week. For example, on the VAT revenue the last Greek proposal I have seen was suggesting a target of 0.93% of the GDP, while the creditors were insisting on 1% target. On the other hand, the creditors agreed to expand the 13% rate to “basic foods” (as was stated in Tsipras’s proposal from Monday) rather than “processed foods” (as was proposal by the creditors on Wednesday). Some leaks from Friday also talked about the creditors agreeing to apply the 13% rate to catering / restaurants (as Tsipras was proposing on Monday).

      This makes the late Friday / early Saturday turn of events all that more surprising. Tsipras decided to stop negotiating and hastily call a referendum. While the one week preparation time will be hardly enough, it still crosses “midnight” (June 30) when “the coach turns into a pumpkin” (the bailout program ends, the deadline for the IMF package is due).

      The only logical explanation I can think of is that Tsipras was losing the Syriza MP support for the agreement. That would have required him to rely on opposition parties to get the agreement approved (which they would have done happily). The Syriza split (based on Tsipras’s calculus) would have caused its demise, and Tsipras’s demise as an influential Greek politician. Whatever his consideration, Greece is paying a heavy price.

      • Giaourti Giaourtaki

        If you would read into Tsipras and Varoufakis explanations you don’t need to find your own, also google with “greek vat 2015” might help about facts.

        • @Giaourti

          Just 10 days earlier Tsipras said he’s ready to take responsibility for rejecting the terms of a deal on aid if creditors demands are unacceptable. If the deal is good, the Greek parliament will accept it; if it is unacceptable — Tsipras will not even submit it for a vote. That’s how representative democracy works; pretty straightforward.

          I might have missed it, but I did not find an explanation why Tsipras did not want a referendum 10 days ago, and why does he want it now. Can you provide any references?

          I also believe that this hastily organized referendum with a vote to approve or reject a fairly technical document (which was only translated into Greek a week before the referendum) makes a mockery of democracy. As I wrote yesterday, it would have made sense to have a referendum several weeks earlier, with sufficient preparation time that would have allowed opposing views to be presented to the voters, and in coordination with the interlocutors (so that predictable but accidental chain of events are not triggered). The referendum question would also need to be straightforward and make sense to the Greek voters.

  2. As i told before. The enemies of the people of Greece and all people of europe will use every trick in the book to undermine democracy in Greece.
    The people and the Greek government must resist, be vigilant and must be ready to defend themselves and democracy.
    OXI/NO! No to humiliation and submission!

    • it’s very easy this time for Greeks to resist: just vote no and exit from Eurozone. Everybody will respect this decision and congratulate you for your boldness. We Italians will watch what happens next with much interest: many of us would also like to leave the Euro. I think it would be a terribly wrong decision, but the Greek example, for the good or the bad, will help many of us to understand risks and consequences. Good luck!

      • Giaourti Giaourtaki

        There can be a NO without exit, to connect it comes from blackmailers in media and politics who also fart that Tsipras has to resign if the decision will be YES, but then the Government will implement the peoples will.

        • Resign no. Get elected again, i would say so. If he advises no and people vote yes he has no mandate. Could he just ignore it, technically yyes but thats not very democratic either

          • Giaourti Giaourtaki

            He didn’t advise nuthing, he just said that government and party will vote nope, the rest is propaganda

          • I dont understand where you see the difference between what I said and what you just said?
            He and Syriza are for a no, so if a majority votes yes thats a problem for him.

  3. Oh, my God….if EZ is transparent is odd, just few days ago the EZ was blamed on this website regarding its lack of transparency…. Greece has a long history of defaults ( 5 times after it became independent 1821). The last default lasted 32 years (1932-1964), so I don’t understand how EU accepted it without to check its credit history… Very strange…

    • Giaourti Giaourtaki

      To call it “default” while no state is existing and 2/3 of the land still is occupied by Ottomans whom Greeks had to pay also reparations for the free parts of Greece is just an awkward joke.
      Better smoke some weed from Kalamata, read history and laugh your ass off.

  4. Giaourti Giaourtaki

    European media “can’t” figure out the differences between 23% and “reduced” 13% (hotels “reduced” from 9%?) plus “hotel” and “restaurants”, instead they write EU wanted to keep hotels and restaurants tax reduced at 13%

  5. The EC is showing the original document, which happens to be in English. I’m sure the media will translate it to Greek, but every translation is also an interpretation. That is why it would be wrong, if the EC tried to translate a document of such a high historic importance.
    A few facts: The Greek government made it clear to recommend a no vote. Thus it is legally impossible for the ECB to increase ELA. When the program expires on Tuesday, the ECB legally has no other choice but to cancel ELA altogether. That means: If the Greek government doesn’t introduce capital controls, then there will be no liquidity left after a while, ATMs will run out of money. If the Greek government decides to pay wages and pensions rather than to service the IMF loan until Tuesday, 6pm Washington time, then the market value of Greek T-bills held by Greek banks might fall, thus they might need to be depreciated in the banks’ balances according to international accounting principles. As those T-bills make up about 22% of the banks passiva, their depreciation might eat up all the banks equity resulting in immediate bankruptcy.
    I think it is very likely that either the Greek state doesn’t pay wages and pensions before the referendum or that most money still in the banks is lost for good. Capital controls would just be temporary, if the referendum ends with “yes” and then Greek default and the collapse of the Greek banking system could be avoided (unless it happens already this week due to incapacity of the Greek government).
    No need to agree with me, but if you disagree, please tell us where exactly I’m wrong and don’t just complain “it’s unfair”.

    • Giaourti Giaourtaki

      Every translator they’ve asked in Brussels said “Look Mam, Frankfurt: Deutsche Telekom lost 40%, hahaha! If you need translators go to a Greek restaurant, malaka”

  6. Every bit of information is well received as long as it clears all the fog that engolfed the creditor debitor affairs and negotiations. People can read and can decide if is ok or not!