ATHENS – Backtracking from campaign promises to hold the line on more austerity measures, Prime Minister Antonis Samaras was set to meet on July 27 with international lenders providing critical bailouts to Greece as his government is reportedly ready to make another $15 billion in cuts, aimed primarily at pensions, salary cuts and limiting health care coverage to only $1,839 a year in a country which had provided universal benefits to all its citizens.
Greece’s economic crisis – which Samaras likened to the 1930’s Great Depression – is so severe that the New Democracy Conservative leader’s coalition, which includes his otherwise rival PASOK Socialists and the tiny Democatic Left, is set to impose more of the harsh conditions on Greeks that the Prime Minister vowed to avoid.
Samaras, PASOK leader Evangelos Venizelos, and Democratic Left head Fotis Kouvelis reportedly had agreed on some $12.26 billion in cuts – without revealing where they would be made – and were set to meet on July 30 to determine the rest. The Troika of the European Union-International Monetary Fund-European Central Fund (EU-IMF-ECB) is providing Greece with $152 billion in rescue loans, but withholding the last installment of $38.6 billion and a second bailout of $173 billion until more cuts are made and Samaras’s government administers more reforms. He said he was going to try to renegotiate the terms but changed his mind.
The pay cuts, tax hikes and slashed pensions, a reduction in the minimum wage, and the phasing-out of collective bargaining rights for workers has worsened Greece’s five-year-long recession, put nearly 1.1 million people out of work, shrunk the economy by 6.7 percent and is closing 1,000 businesses a week, but the Troika is insisting on more austerity so that banks putting up the rescue monies get paid back first.
The newspaper Kathimerini said that the cuts are set to come in pensions, benefits, healthcare spending and possibly further cuts to civil servants’ salaries. The possibility of extending the retirement age from 65 to 67 is also being examined. This would save more than $1.22 billion per year. The paper reported that Samaras, Venizelos and Kouvelis though can’t agree on where to make the last $2.74 billion in cuts would be made, although the Premier was said to want to protect judges and military officers from pay cuts, which could save $245 million a year.
But one of the reported cuts – limiting Greeks to a ceiling of 1,500 euros, or $1,839 per year for health care coverage, including hospitalization and drugs, was already drawing fire from groups representing patients, such as those requiring kidney surgery, who said they would “left to die” under the plan. The limit was suggested in a cost-cutting plan drawn up by the Center of Planning and Economic Research (KEPE), which the government has used as its blueprint for additional savings.
Health Ministry sources denied that this option is being considered but the plan for the cuts has not been made public, which the newspaper said fueld speculation that some form of spending limit could be introduced. Currently, social security funds cover the full cost, or at least heavily subsidize, medical treatment and drugs. Kathimerini understands that under the plan, anyone exceeding their limit would have to pay $12.25 per visit to a doctor and 15 percent of their daily treatment if they are hospitalized.
A doctor at a public hospital pointed out to Kathimerini that an appendectomy costs $1,715, which means that should a patient use his or her social insurance to cover the operation, they would only be left with another $122.15 in coverage for the rest of the year. The National Association of Kidney Patients blasted the idea of introducing a spending limit for patients. “If a ceiling of 1,500 euros is set, this would only cover a very brief period of treatment and course of medicines,” the association said. “This simply means that when someone does not have the funds, or has spent all their money or has sold all their property, they will be left to die.”
The government is also reportedly set to eliminate the two months annual bonuses given workers and pensioners completely, although they had been severely cut already. That would leave Greeks with even less disposable income which could lead to further decline in tax revenues as more businesses close, worsening the recession even more. Also on the target list are the so-called “eternal students” at free Greek universities, who sometimes remain in school for many years without graduating.
“Everyone wants to contribute to achieving the fiscal targets,” said government spokesman Simos Kedikoglou. “Everyone in this negotiation is seeking alternatives so that this can be achieved with social justice and without worsening the recession,” he added. Finance Minister Yannis Stournaras briefed the Troika representatives on the cost-cutting measures and, according to Kathimerini, suggested that some could apply from this year in a bid to front-load the program. Stournaras also discussed with Greece’s lenders the details of the structural reforms the government plans to implement. Sources said that the Troika said no more fiscal measures beyond those agreed would be needed this year.