ATHENS – Inspectors for international lenders providing Greece with critical money lifelines were to arrive on July 3, but negotiations with officials of the country’s new coalition government on whether changes will be allowed to bailout deals have been put off. The newspaper Kathimerini reported that the talks that could decide whether new Prime Minister Antonis Samaras’ uneasy alliance government has more time to implement more reforms will not begin until July 24.
To get a second rescue package of $173 billion, Samaras signed a deal with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) that he simultaneously has vowed to both uphold and to try to amend. Greece is surviving on a first bailout of $152 billion from the lenders.
While technically in a partnership with the PASOK Socialists and Democratic Left parties who have given him their votes in Parliament, Samaras’ Conservatives are the ones who are primarily negotiating with the Troika. He will not have his new Finance Minister, noted economist Yiannis Stournaras, in place until his swearing-in, scheduled for July 5.
The technical inspectors will for now concentrate on checking Greece’s books to decide whether the next loan installments can be released. The Troika had insisted that the new government adhere to the austerity measures that have worsened a five-year recession, created 22.6 percent unemployment, shrunk the economy by 6.5 percent and closed some 1,000 businesses each week, and the lenders want another $15 billion in cuts. Samaras is anxiously trying to find ways for Greece to get two more years to impose more reforms and delay meeting fiscal targets, although the Troika had also warned it would stop payments if Greece did not follow its orders.
The July 24 date is important as a Greek state bond of $4.03 billion held by the ECB expires on August 20, and some of the other 16 countries with Greece in the Eurozone who use the euro as currency are reportedly reluctant to release further aid to Greece before talks on the debt deal have been concluded. Troika officials have indicated that they are open to hearing proposals for a different approach to implementing reforms as long as budget deficit reduction targets do not change.
Alexis Tsipras, head of the Coalition of the Radical Left (SYRIZA) party that finished a close second to New Democracy in the critical June 17 elections, told a conference sponsored by the magazine The Economist that no talks should be held unless Greece gets the same deals the EU gave Spain and Italy in bailout monies for those countries’ banks.
Tsipras said Greece was “just chasing its tail” and must immediately renounce the harsh austerity terms in the deal Samaras and Venizelos signed together when they shared a brief previous coalition. “The longer the (memorandum) lasts, the faster the social and economic resilience of the country will be exhausted,” he said.
During the campaign, Tsipras said he wanted to renegotiate the terms or renege, which Samaras said would have forced Greece out of the Eurozone. Samaras did not explain why his renegotiation hopes would not. Tsipras told The Economist audience, “Continuing the bailout’s austerity will push our country to voluntarily withdraw from the Eurozone.” He said that Greece’s young are giving up on their country and see no future. “The most important parts of society, the young scientists, the pioneers of Greece’s future, are being pushed to the margins of society and fleeing abroad.”
In Brussels, the seat of the EU, the spokesman for European Economic and Monetary Affairs Commissioner Olli Rehn, Simon O’Connor, played down prospects for a concession to Greece, telling Kathimerini that it was too soon to say whether $63 billion in funding set aside for the recapitalization of Greek banks as part of the second bailout would be dissolved from the country’s state debt.
Greece has already diverted $23.9 billion toward refinancing the country’s banks because they, along with other private investors, suffered 74 percent losses when former Finance Minister Evangelos Venizelos, now PASOK’s leader, imposed a so-called Private Sector Involvement (PSI) deal to help write down the country’s debt by $134 billion.
(Sources: AMNA, Reuters, Athens News/dmcu)