ATHENS – With his Cabinet members reluctant to make deep cuts needed to satisfy international lenders who want Greece’s government to slash spending by $14 billion, new Prime Minister Antonis Samaras has told them that he will if they won’t. Finance Minister Yiannis Stournaras has met resistance from his fellow ministers who are repelling reductions in the budgets for their departments.
Backtracking on another campaign pledge to try to hold the line against imposing more austerity measures, the Samaras government was looking at cuts aimed primarily at pensioners, health care and even nursery schools, while exempting high-paid military officers from salary reductions.
The Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which is providing Greece with $152 billion in rescue loans said that a second pending bailout of $173 billion depends on the new government imposing more of the same kind of harsh austerity measures that have fueled two years of protests, strikes and riots and that the money pipeline could be shut off unless Greece complies.
Faced with that pressure, Samaras said unless his ministers identify areas where they can make cuts, that the decision would pass to Stournaras and up to the Prime Minister’s office. He also gave them one week to compile a list of all properties owned by their departments as he hopes to sell off Greek lands and privatize companies to raise critical revenues.
The newspaper Kathimerini said that Samaras stepped in on July 17 after two days of talks between Stournaras and other ministers failed to produce an agreement over what could be cut. The Prime Minister was reportedly irked that his Cabinet, made up of politicians from his New Democracy Conservatives and technocrats, could not come to terms and had settled on cuts of only 5.6 billion euros, or about $6.8 billion, less than half of what is needed.
Samaras is overseeing an uneasy coalition that includes his rivals, the PASOK Socialists and the tiny Democratic Left, but they have refused to let any of their members sit in the Cabinet, providing him only with their votes in Parliament so he can have a majority to rule. Speaking to Vima FM, PASOK leader Evangelos Venizelos said that a deepening recession made the government’s mission to come up with the $14 billion “almost impossible.”
Samaras and Venizelos supported the pay cuts, tax hikes and slashed pensions insisted upon by the Troika when the two political leaders shared an earlier shaky hybrid government but now are trying to find ways to renegotiate the terms and distance themselves from the memorandum they signed.
Interior Minister Evripidis Styliandis reportedly was concerned that funding for local authorities will be reduced further. Compared to 2009, central government funding for municipalities has been slashed by 62 percent. There are concerns within the ministry that more cuts could lead to basic services such as nursery schools being scrapped, the newspaper Kathimerini reporter.
Defense Minister Panos Panayiotopoulos saw Samaras and argued that there should not be any cuts in the “special salaries” received by military personnel. The government is reluctant to reduce the above-average wages in the armed forces. Health Minister Andreas Lykourentzos presented plans for the merger of some organizations, but the reduction of costs was well short of the target for his department, the newspaper said. There is also pressure on Labor Minister Yiannis Vroutsis to produce 5 billion euros ($6.14 billion) in savings, 3 billion euros ($3.68 billion) from benefits and 2 billion ($2.45 billion) from pensions.
Stournaras was to receive a report from the Center of Planning and Economic Research (KEPE) that will outline where savings could come from. Kathimerini reported that the proposals are to limit basic and supplementary pensions to a total of less than 2,400 euros ($2,947) per month, which will save 1.5 billion euros, after the drop in tax revenues is factored in. There are also plans to save 1.5 billion euros ($1.84 billion) from general government spending, which includes stopping pensions for the orphaned, single or divorced daughters of deceased judges and military officers, which would save 220 million euros ($270.2 million) and reducing MPs pensions by 20 percent to save almost 6 million, or $7.37 million