Greece-Troika Budget Stalemate Continues

Greek Prime Minister Antonis Samaras will go to a European Union meeting on Oct. 18 empty-handed after his coalition partners refused to go along with changes to labor rules as part of a $17.45 billion spending cut and tax hike plan.
Samaras, in his first appearance at an EU gathering, had hoped to be able to show unity for more austerity measures demanded by international lenders and speed the release of a delayed $38.8 billion installment that is the last in a first series of $152 billion in rescue loans from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.) A second bailout, for $172 billion, is also on hold.
Samaras, the New Democracy Conservative leader, got an unexpected roadblock when PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis backed away from their hedged support for reforms and said they couldn’t go along with the firing of public workers, a six-day work week and reductions in severance pay and less warning time for discharged employees.
“Further interventions on labor issues don’t help productivity, competitiveness or employment,” Venizelos told state-run NET TV. “We must look elsewhere now and the insistence on this is wrong,” he said, adding some European Union members were “playing with fire.”
As finance minister in a previous PASOK government that was brought down by ceaseless protests, strikes and riots against austerity, Venizelos doubled income and property taxes and taxed the poor but is reversing himself as polls show the party falling into near single-digit numbers. While Samaras is in Brussels, Greece will be in another virtual shutdown as the country’s two largest labor unions called for another general strike, the third in a month, and more protests are also expected in the heart of Athens.
Samaras met with Venizelos and Kouvelis for three hours on Oct. 16 but failed to move them from their opposition, although both had earlier said they would go along with the demands by the Premier and Troika for more austerity and have changed their minds several times. The coalition partners also reportedly objected to scrapping of automatic pay increases for employees in the private sector who are subject to the national collective contract.
Kouvelis opposed these measures and said his party would not vote for them in Parliament. Venizelos said that if Democratic Left does not support the reforms, PASOK would not be in a position to back them either. The troika’s demands are not structural reforms. They are aimed at razing Greek society, fueling the recession and increasing unemployment,” Kouvelis said.
He added that the Troika’s insistence on tough changes to labor laws “surpass the ability of Greeks to cope.” He had reportedly been ready to back the entire austerity package but objected to the Troika’s proposals for the immediate dismissal of 3,000 civil servants.
The Greek prime minister stressed that most of the spending cuts and tax measures that the country’s lenders wanted have been agreed and that 2,000 civil servants will be dismissed immediately, receiving 75 percent of their salary for a year before being made redundant. Another 11,000 dismissals will follow in 2013.
“Our aim is still to receive our next loan installment within November,” Finance Minister Yannis Stournaras said, reflecting the government’s hope that a deal will be reached with the Troika following the EU summit. Talks with Troika envoys ended abruptly this week but both sides insisted they hadn’t broken down, but had only paused. The IMF’s representative, Poul Thomsen, said, “We agreed on most policy issues. What little is left will be covered soon.”