ATHENS – With inspectors from international lenders due on July 5, new Greek Prime Minister Antonis Samaras will reportedly try to convince them to accept a deal in which Greece would move more quickly on privatization and cutting the number of state workers in return for better terms to go along with continued aid.
Greece is surviving on $152 billion in rescue loans from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) and readying for a second bailout of $173 billion, but on the condition that more of the austerity measures the lenders demanded be implemented; these measures have in effect worsened a deep recession, created 22.6 percent unemployment, shrunk the economy by 6.5 percent and led to the closing of 1,000 businesses a week.
Sources told the newspaper Kathimerini that Samaras – who opposed the first bailout but signed the second and agreed to the austerity measures that came with it – would also offer to create partnerships with private enterprises and merge state organizations. The Troika had warned that any attempt to tinker with reforms or fail to make another $15 billion in cuts, despite evidence that austerity has backfired, could lead to the money pipeline being shut off, but also signaled it was willing to hear Greece’s arguments. Samaras has pledged to both uphold the Troika demands “to the letter” and to change them, saying he would go along with more austerity but at the same time wants to reverse some of the conditions he supported.
Greece is set to present what was called “alarming” data showing the state of the economy is far worse than even the dire estimates that had already been set because pay cuts, tax hikes and slashed pensions have nearly destroyed consumer spending, ruined the critical tourism season and given little hope for any short-term recovery. Samaras is overseeing an uneasy alliance coalition government with the PASOK Socialists and the tiny Democratic Left because his New Democracy party did not get enough of the vote to form an majority administration.
Troika auditors have already begun their review of Greece’s books, but top officials are set to arrive to talk with government leaders shortly after new Finance Minister Yiannis Stournaras is sworn in. Samaras hopes that the long-delayed privatizations and cutting of public sector posts will be enough to give Greece two more years to meet fiscal targets set by the Troika. The lenders had estimated that Greece could raise as much as $62 billion by selling or leasing state properties and privatizing state enterprises, but only about $3.7 billion has been realized and the head of the privatization agency quit after his service was suspending during the period between two brutal election campaigns.
Samaras reportedly will also consider asking that Greek banks, which along with other private investors, were hit with 74 percent losses, for direct recapitalization from the European Stability Mechanism, a suggestion made by his chief rival, Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras, who finished a close second to the Conservative leader in the June 17 elections.
The negotiations could be tough as, because of eye surgery, Samaras could not attend a critical meeting of EU leaders in Brussels late last month, and he did not have a Finance Minister in place because his first choice, former Bank of Greece President Vassilis Rapanos, also became ill and then decided to rescind the post.
IMF Managing Director Christine Lagarde is ready to draw a hard line. “I’m not in a negotiations or re-negotiations mood at all,” Lagarde told MSNBC. “We are in a fact-finding mood. I’m sure they will have excellent numbers to show. I’m very interested in seeing what has been done in the last few months in terms of complying with the program.”
Speaking to Members of the European Parliament in in Strasbourg, France, European Commission chief Jose Manuel Barroso took shots at critics who want Greece to leave the Eurozone of the 17 countries using the euro as a currency. “There is a consensus, including those states outside of the euro area, on the need to strengthen the euro area,” he said. “It would be a complete mistake to try to divide the euro area from the rest of the EU. I am also puzzled with the ease with which some of you are recommending some member states to leave the euro.”