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What will happen if Greece abolishes the pension cuts despite creditors objections?

Greece insists that the austerity measure to further pension cuts as of 1. January 2019 is not necessary. Creditors try to avoid commenting on that, although the usual “Euro Sources Anonymous” claim that the euro finance ministers are against abolishing of the measure.

“Greece’s budget 2019 will not include pension cuts but relief measures for low income groups,” government Vice-President and Economy and Development Minister Yiannis Dragasakis said on Thursday.

In an interview with radio station REAL FM, the minister said that Greece can back up its demand not to slash pensions with creditors on the grounds that it will harm the economy.

“I believe that the prime minister and the government, with these arguments, will secure in the end that there will be no cuts to pensions.” said Dragasakis.

“We have passed from the budgets of cuts, to budgets that have room for tax relief measures and moves to improve the social state and boost income levels,” he said.

While Dragasakis was drawing a rosy future for Greek pensions, the Euro Working Group was meeting in Brussels.

Apparently the Greek government has already submitted its request to avoid the austerity measures that was urgently demanded by the International Montetary Fund as one of the preconditions that the Fund would join the 3. bailout program.

The third and last bailout program came and went, the IMF stayed out, and the Greeks remained stuck with an austerity measure threatening to push for the country’s pensioners deeper in impoverishment.

Ever since July, the Greek side has been claiming that the measure will not be implemented, even EU Commissioner for Monetary Affairs Pierre Moscovici left a window open.

However, the European creditors may not be united about the future of the pensions.

‘The decision on pensions has been taken, is crystal clear, and has already been agreed to by the Greece,’ an EU official told daily Ta Nea on conditions of anonymity. There was no reason for any discussion at the EWG meeting, the decision was taken, the anonymous official said.

Whether there will be any discussion or not, it will be shown when the European creditors’ representatives will visit Athens after September 10th and the budget 2019 will be on the agenda.

Of course, the government has passed the pension cuts legislation through the Palriament last year. Of course, Greece has exited the bailout program and is now under surveillance by the Euro creditors.

Of course, the IMF warned just yesterday that the pension cuts must be implemented as of 1. January 2019.

Of course, the IMF had imposed one more measure which is the broadening of the tax-free basis to annual incomes of below €6,000 which on its part is the poverty line according to EU. But this measure is thought to be implemented as 0f 1. January 2020 and therefore there is no discussion about it for the time being.

And, of course, the final decision will be taken by the euro finance ministers at a Eurogroup meeting most probably in November or December the latest.

However, what pension cut supporters seem to forget is that these two measures were linked to the so-called “automatic cutter” and under the conditions that Greece would not meet its fiscala targets.

But what will happen if the Eurogroup says NO, you have to implement pension cuts and Greece says YES, our budget is top fit, we will meet the primary Surplus targets and we can do without the measure?

Will European creditors ask back the money they lent to Greece right away?

Will they impose a fine?

will the ECB jump in to save the creditors’ face as in the first half of 2015?

Will the notorious anonymous EU sources start the usual cheap blackmailing as in the past?

Will EU authorities launch a coup like they did with PASOK PM Papandreou in 2011?

We’ve been there, many times since 2010 and we have seen all that. Therefore, will they come up with new ideas, now that Greece is no more dependent on bailout tranches?

PS I have no answer to these question but I’m curious to see what happens.

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