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Athens struggles with its creditors - Daily News Egypt

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Athens struggles with its creditors

International creditors have been trying to reach a compromise deal with Greece. But the team of inspectors is leaving Athens empty-handed. The Greek government is nevertheless confident that an agreement is imminent.The last round of negotiations dragged on into the early morning hours in a luxury hotel in Athens. There were still hopes for an agreement with the lenders. But on late Thursday evening the disillusionment came when Greek state television reported that important questions were still open.

A little while later a spokesman for the International Monetary Fund (IMF) in Washington confirmed that “much remains to be done.” On Friday, the delegation’s leaders from the European Commission, the IMF, the European Central Bank and the European Stability Mechanism were to leave. They still want to continue talks with the Greek government. If possible, an agreement should be reached before the meeting of European finance ministers on March 20.

But is this really doable? The otherwise talkative Greek Finance Minister Eukleid Tsakalotos has been remarkably quiet. Jorgos Stathakis, the minister of energy, was more forthcoming. He assured a television audience that in the last few days, great progress had already been made. He also thinks that an agreement is possible before the finance ministers’ meeting.

Political scientist Jorgos Tzogopoulos is more skeptical and told DW: “Experience makes me less optimistic that we can achieve a quick breakthrough.”

After all, left-wing Prime Minister Alexis Tsipras had agreements within reach several times without anything happening in the end. This is the third aid program for Greece and totals some 86 billion euros ($91.5 billion). However, the country will only be granted new loans if creditors are satisfied with the implementation of reforms that have already been pledged.

To this end, a review of Greek reform efforts has been ongoing since October. Reforms of the pension system and the labor market continue to be controversial. In particular, creditors are demanding that tax-free income be reduced to a maximum of 6,000 euros.

Getting closer to European socialists

This is by no means all: Athens is also expected to commit itself to additional austerity measures for the period following the expiration of the current aid program in 2018. Tsipras has been resisting this for a long time. But now he seems ready to talk about it. In return, however, he has called for relief in tax and social policy.

In a second step, it is important to ensure clarity about the primary surplus that Greece is required to achieve in order to qualify for more bailout money.

But this depends to a large extent on whether the IMF continues to participate in the rescue program. If this were up to Tsipras alone, it would not be the case. The prime minister continues to bank on “political negotiations” on the future of the Greek economy. This means that he wants to coordinate important economic decisions with his cabinet, and not with international creditors.

The left-wing prime minister is looking for support from European socialists. As so often in recent years, he appeared at the meeting of the socialists ahead of the EU summit in Brussels and tried to reason with his hosts. Tsipras was quoted on Friday in the Greek media: “We can’t say that [German Finance Minister] Schäuble is to blame for everything. Schäuble does his job, but some allow him to do whatever he wants.”

Political scientist Tzogopoulos believes that there is measured calculation behind Tsipras’ attempted rapprochement with the socialists: “Tsipras is apparently speculating on a shift to the left in the parliamentary elections in Germany and hopes that then at the latest the constellation of power in Europe will be more favorable for him.”

Whether this tactic will work is questionable – Greece will already need fresh money this summer to repay several billions in loans.

Still no growth in the Hellenic Republic

The latest cabinet meeting in Athens on Monday revealed the clash between aspirations and reality. Tsipras asserted that Greece would return to growth after several years of recession. But he had hardly finished speaking before Greece’s statistical authority warned of another downward spiral for the Greek economy.

Contrary to optimistic expectations, the economy shrank by 1.2 percent in the last quarter of 2016, thus closing the previous year with zero growth.

Government spokesman Dimitris Giannakopoulos tried to make the best of a bad situation. He explained on Greek television that the statistics authority was completely independent and therefore the premier could not know in advance what the current economic data was.

Constitutional expert Kostas Botopoulos told DW that this argument was not pulled out of thin air: “Economic data from Athens have been questioned for a long time, but they are reliable nowadays, because the statistical authority now acts independently of the government.”

Because of this he finds the confidence of the prime minister all the more astonishing: “If you are constantly recording negative growth figures, you cannot seriously believe that growth is at last coming back and the worst is already behind us.”

Topics: Athens creditors

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