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After Samaras Meets Troika, Greece Admits It's "Off Track"

Greek Prime Minister Antonis Samaras faced tough talks with the country’s international lenders who are providing bailouts

ATHENS – New Greek Prime Minister Antonis Samaras faced the first test of his uneasy coalition government on July 5 when he met with high-ranking representatives of the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to ask they back off demands for more harsh measures as a condition to keeping critical rescue monies coming.
Samaras met the officials at the Maximos Mansion following the swearing-in of new finance minister Yiannis Stournaras, who will be his right hand man for planning negotiations to make changes to a second bailout of $173 billion that Samaras signed, but now wants to revise. Greece is surviving on a first series of $152 billion of rescue loans, but those came with pay cuts, tax hikes and slashed pensions, yet the Troika is demanding more, plus another $15 billion in cuts. Samaras told them that his administration was “determined to proceed with greater efficiency on fiscal adjustment and speed up structural reforms,” his office said.
Samaras wants Greece to have two more years to meet fiscal targets and to ease up on the firing of 150,000 public workers, although he reportedly has agreed to speed the pace of long-delayed privatization of state enterprises and the sale or lease of state-owned properties. Stournaras acknowledged that the country’s recovery plan was “off-track” in some areas and that “difficult years” lay ahead for Greece, one of 17 members of the Eurozone which use the euro as a currency.
Stournaras said Greece’s fiscal adjustment program had been slowed by an election in May and a ballot re-run on June 17. “The economy has gone through two difficult elections and the programme is off track in some respects, but it is on track in others,” he told reporters. “The Troika people told me jokingly that I’m not going to have a good time at the Eurogroup on Monday (July 9,)” he said, referring to his first meeting next week with fellow finance ministers of the 17-nation Eurozone of countries using the euro as a currency.
Samaras is in a bind: he needs to meet Troika demands or risk the money pipeline being shut off, including the next loan installment, this one for $39 billion and without which Greece will quickly run out of money and be unable to pay its workers, pensioners or bills that have been put in abeyance, but he is trying to mollify a furious electorate by trying to keep a pledge to get the lenders to ease up the pressure on reforms.
”The prime minister underlined that the Greek government is determined to proceed more effectively towards fiscal adjustment, to speed up structural reforms so that the economy recovers,  that jobs are created and to secure social cohesion,” Samaras’s office said in a statement. Eurozone leaders said that the bailout program could be adjusted to make up for time lost to two elections and a deeper than expected recession. But they will not change its main positions or targets, giving Samaras little wiggle room. The Troika officials will return later this month to decide whether to ease up or force Greece to stick to its schedule.
And as Greek workers have endured pay cuts, tax hikes and slashed pensions, the government acknowledged that in some areas it has failed to collect critical revenues, such as in privatization. A top official at the agency tasked with that mission said that more than a third of state properties are being unlawfully run by people or companies who have no right to do so but continue with impunity or prosecution. Andreas Taprantzis, an Executive Member of the Hellenic Republic Asset Development Fund (TAIPED) board said Greece does not receive a single euro from the users of 28,264 state properties who simply helped themselves to them. He said there are 3,152 prime assets that could be utilized and bring in as much as $12.5 billion for the cash-strapped country.
Samaras, whose New Democracy Conservatives are working with their bitter rival PASOK Socialists and the tiny Democratic Left, was reportedly ready to tell the Troika that the government would:

  • Hire only one worker for every 10 who leave
  • Transfer public workers between agencies instead of firing them
  • Speed privatization, which has brought in less than $3.75 billion out of a target of some $62 billion set by the Troika
  • Allow citizens to pay their crushing tax debt in installments, although this would mean collection of about $3.12 billion would be delayed a year

Addressing his Members of Parliament, PASOK leader Evangelos Venizelos – who also signed the second bailout deal when his party was serving in a previous short-lived coalition with New Democracy – said the country needs an updated, realistic bailout plan, but offered no suggestions other than that suggested previously by Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras that Greek banks be directly recapitalized by the lenders. Samaras has taken many of his cues from Tsipras’ plans although the Conservative leader criticized them during the campaign ahead of the June 17 elections Samaras barely won over Tsipras.
Venizelos,  who as a former finance minister doubled income and property taxes, taxed the poor, let tax cheats escape and signed both bailout deals calling for firing of workers, reversed himself too. “Savage dismissals (of public sector workers) can’t happen and aren’t necessary,” he told his MP’s. Trade unions are a core constituency of PASOK and both major parties have been blamed for creating the crisis by hiring hundreds of thousands of needless workers in return for votes.
But fears that Greece could yet be forced out of the Eurozone have not eased in some quarters. In Stockholm, Swedish Finance Minister Anders Borg said on Swedish Radio on Thursday there was a major risk Greece would fail to fulfill its obligations to its lenders and end up in ”some sort of default.” Before the election, Samaras said that the changes sought by Tsipras would have done that, but said that his would not have, although they are nearly identical in some areas.
A government spokesman said that the austerity measures that came with the loans have hurt the country’s economy, not helped it, although the Troika is insisting on more, ramping up the pressure on Samaras, whose brief tenure since the June 17 elections has been marked by several missteps, including a break-in at the Finance Ministry office in which crucial economic documents were said to be stolen just as Troika inspectors came to Athens to review Greece’s books and as Samaras was set to open talks with officials from the lenders. Deputy Finance Minister Christos Staikouras said the Greek economy, in its fifth year of a recession, would contract 6.7 percent this year compared to a previous forecast of 4.5 percent.

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