ATHENS – Unable to attend a critical meeting of European Union leaders because he is still recovering from eye surgery for a detached retina, new Greek Prime Minister Antonis Samaras has written the EU a letter asking them not to push Greece beyond the edge by sticking to the harsh terms of a bailout deal he signed with them when his New Democracy Conservatives shared a previous hybrid government with the PASOK Socialists, who are now in a three-way coalition with him and the Democratic Left.
The letter, as reported by Greek media, was contradictory in that Samaras asked both for changes to the austerity measures he helped impose, but vowed to uphold them at the same time. The letter was delivered to EU President Herman Van Rompuy by Greek President Karolos Papoulias, who holds only a symbolic office, but was heading the delegation to Brussels in Samaras’ absence and because the newly designated Finance Minister, Yiannis Stournaras had not yet been sworn in.
Stournaras replaced the first choice, former Bank of Greece President Vassilis Rapanos, who had also been hospitalized and stepped aside, although there were reports that he was unhappy that the Samaras Cabinet was top-heavy with politicians and not enough technocrats. PASOK leader Evangelos Venizelos and Democratic Left leader Fotis Kouvelis barred any of their members from being in the Administration, fueling speculation they were distancing themselves in case the coalition they otherwise support fails. They have given Samaras their votes in Parliament so he can have a majority as New Democracy did not win enough votes in the June 17 elections to form the mandated government.
Government sources told the newspaper Kathimerini that Samaras confessed that conditions of a second bailout for Greece yet to be released – for $173 billion – need to be revised because the pay cuts, tax hikes and slashed pensions that came with a first rescue package of $152 billion had worsened the country’s recession. But Samaras wrote that he would honor Greek pledges to overhaul the economy, slash the deficit and control a runaway debt of more than $460 billion, the Ethnos daily said.
The coalition wants a two-year extension, starting in 2016, for Greece to meet fiscal targets under the memorandum signed with the Troika, which had insisted that any attempts to tinker with the deal could lead to the money pipeline being shut off and another $15 billion in cuts was necessary.
The following is the full text of the prime minister’s letter:
As I have already informed you, I will unfortunately not be able to attend the current European Summit, due to an eye operation I had to undergo. Greece will be represented by the President of the Hellenic Republic, Mr. Karolos Papoulias. With this letter I would like to reassure you that Greece is absolutely determined to fulfill its obligations emanating from the recent bail-out agreement.
The new Government of Greece accepts ownership of the adjustment Programme and is fully committed to its targets, its objectives and all its key policies. I will speed up the implementation of the Programme with special emphasis on the Privatisation agenda. Of course, there is a question of some necessary modifications to the Programme in order to control unprecedented unemployment and halt the devastating recession Greece is going through for the fifth consecutive year. This would also ensure that all targets are met.
I am looking forward to meeting you, as soon as my medical doctors allow me to travel.
Samaras will not have long to make his case. Troika inspectors are due in Athens next week on a fact-finding mission for talks with his government. The Troika had said it would not talk readjustments with Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras if he had won. Ironically Samaras has adopted much of the SYRIZA platform in his current campaign while at the same time warning that Greece would have been forced out of the Eurozone of the 17 countries using the euro if Tsipras had won. SYRIZA finished a close second to New Democracy in the elections.
“Negotiations on the bailout terms could take place after the initial visit. This mission will assess the recent economic developments,” IMF Spokesman Gerry Rice told a news briefing. “The objectives of the program as agreed remain the basis for those discussions, but as we have said before, if the new government has ideas on how those program objectives can be achieved, then we are open to those discussions.”
The United States, the IMF’s largest member country, has also signaled it would support new program timelines given delays caused by political developments in Greece, but that objectives to reform the economy should remain. Germany, which is supporting much of the bailout bill, has said it would not give Greece any more time, complicating the problem.
The IMF also said it planned an initial visit to Cyprus next week for initial talks with Cypriot officials on their request for IMF financial assistance. Rice said the IMF would join the EU and ECB in talks with Cypriot authorities, which have requested help from Europe to prop up its banks. Since the IMF does not lend to sectors, its loan will be targeted at economic reforms. Cyprus is heavily dependent on debt-laden Greece and its banks have been shut out of international debt markets for over a year.