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Venizelos Says No More Pay Cuts or Tax Hikes

ATHENS – Greek Prime Minister Antonis Samaras and his coalition partners have agreed on little more than half of the $14.1 billion in cuts demanded by international lenders over the next three years, but agreed that there would be no more fiscal measures this year, without explaining what that meant. Samaras met for four hours with PASOK Socialist leader Evangelos Venizelos and Democratic Left party head Fotis Kouvelis after Finance Minister Yiannis Stournaras held two days of mostly fruitless talks with fellow Ministers who did not want cuts made.
Samaras said the leaders had agreed on some cuts but did not specify where they would be made, only that they would be about $9.2 billion, far short of what the Troika of the European Union-International Monetary Fund-European Central Bank has insisted upon to keep rescue loans coming into the country. Greece is surviving on a first bailout of $152 billion from the Troika but a second for $173 billion has been delayed until the new government imposes more reforms and spending cuts. The coalition agreement does not meet that requirement, but Samaras said the talks, which were supposed to have ended on July 17, would go on. He also backed away from his warning to ministers that he would make the cuts if they did not.
It was left to Venizelos to say that Greece would try to renegotiate the bailout terms with the Troika, which Samaras said he was going to do, and that the pace of privatizations would have to be accelerated, despite criticism that the country’s deep recession and willingness to sell its assets cheaply would hinder the economy for years.
Greece has agreed to make three billion euros of savings by the end of the year – $3.68 billion to be exact – but Venizelos said there would not be an additional $2.45 billion in cuts as expected. Speaking for the coalition, the former finance minister said that there would be no further across-the-board pay cuts or tax hikes – except for a tax jump on home heating oil that could hit the poor and elderly hard. The government has also continued deep pension cuts it said it would not make, including the elimination of auxiliary pensions many elderly need to survive on.
The government will continue a doubling of the property tax implemented by Venizelos when PASOK shared an uneasy alliance with New Democracy in a previous government, and Greeks would also continue to pay a big increase in income taxes that he instituted. Kouvelis said the poor and elderly would receive some kind of assistance, particularly when the heating oil tax kicks in during the fall period, the time when most renters pay for it.
The newspaper Kathimerini said that Venizelos was successful in his attempt to convince Samaras and Kouvelis to form a negotiating team that would act with Stournaras in talking to the Troika. That essentially undermines the role of Stournaras, a respect economist who founded a respected Athens think tank. The new team would be called the National Committee for Economic Planning, essentially removing the power of the Finance Minister, who was also marginalized in the talks. Past governments have given their Finance Ministers – such as Venizelos – a commanding position in representing the country, especially during the economic crisis that has resulted in two years of protests, strikes and riots against the Troika-required austerity measures.
The Samaras-Venizelos-Kouvelis Administration said it would also change track and ask for some of the future loan monies to go toward boosting the country’s growth, although under the previous government, Samaras and Venizelos agreed that all tax revenues needed to repay investors would go into a special escrow account, limiting the availability of funds for Greek programs. Troika officials are due to hold talks with the government on July 26.

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