Greece was putting the final touches to reform proposals due to its European creditors yesterday, seeking to balance its commitments under a debt deal with curtailed anti-austerity ambitions.
European finance ministers gave Athens the deadline on Friday to present proposals that would convince its creditors to grant a four-month extension of its debt bailout.
“We are compiling a list of measures to make the Greek civil service more effective and to combat tax evasion,” Greek Minister of State Nikos Pappas told Mega television channel on Sunday.
Photo: Bloomberg
Greece’s hard-left government is walking a tightrope between its commitments to European creditors and its electoral pledges to end austerity in a nation struggling to recover from a severe economic crisis.
In an early indication of possible detail, popular German tabloid Bild yesterday reported that Athens has drawn up a 7.3 billion euro (US$8.3 billion) tax hit list aimed at the nation’s oligarchs and lucrative smuggling industry, citing sources close to the government.
Critics in Greece have blasted the government for what was seen as capitulation to European demands, but Germany, the leading advocate of austerity, has opposed changes to the terms of its bailout.
“Europe has some breathing space, nothing more, and certainly not a resolution. Now it’s up to Athens,” German Minister of Foreign Affairs Frank-Walter Steinmeier told Bild. “The fundamentals — namely assistance in exchange for reform — must remain the same.”
Today, Greece’s so-called “troika” of creditors are set to decide whether to proceed with Friday’s agreement, with the chance that the compromise could be scrapped if they are not satisfied.
The four-month extension would allow for a new reform deal to be negotiated in that time period.
Pappas, a close aide of Greek Prime Minister Alexis Tsipras, said the talks would be “a daily battle... every centimeter of ground must be won with effort.”
Facing criticism from both sides of Greece’s political spectrum, Tsipras said the government had achieved an “important negotiating success” that “cancels out austerity.”
His SYRIZA party came to power last month pledging to end deeply unpopular austerity measures and renegotiate Greece’s huge debt, and asked for a six-month loan assistance until it could submit its four-year reform plans.
Instead, it received less time and no new money to tide it over in the meantime.
Still, Greek officials on Sunday insisted the government would apply its radical agenda within the framework provided by Europe.
“This is a four-month truce that gives us time and a breath of air,” Greek Alternate Minister of Administrative Reform Giorgos Katrougalos told Skai TV, adding that Athens intended to meet its fiscal requirements “by making the rich pay.”
Pappas said the government still intended to hire up to 11,500 civil servants this year and spend up to 400 million euros on immediate poverty relief.
However, while Athens said it had averted threatened cuts to pensions and tax hikes, and persuaded its European creditors to drop unrealistic budget demands, this was far from enough for some.
“There can be no compromise... Between a slave and a conqueror, the only solution is freedom,” said one of SYRIZA’s most respected members, 92-year-old wartime resistance hero Manolis Glezos.
“I wish to apologize to the Greek people for taking part in this illusion,” Glezos said.
Meanwhile, Conservative former Greek prime minister Antonis Samaras said: “If this is ‘successful negotiation,’ what would count as a fiasco?”
To win the hard-fought deal, Athens pledged to refrain from one-sided measures that could compromise fiscal targets and had to abandon plans to use about 11 billion euros in leftover European bank support funds to help restart the Greek economy.
The government had promised to spend 2 billion euros this year on poverty relief for thousands of families hit by five years of wage cuts and tax hikes.
Last week, it presented legislation offering debt forgiveness to low-income citizens owing money to the state, but Brussels has now demanded to vet such measures beforehand.
Two previous rounds of talks ended in acrimony, with Greece accusing Germany and other hardline EU member states of sabotaging a deal.
If Athens sticks to its commitments, it stands to receive up to 7.2 billion euros in funds still left in its 240 billion euro bailout from the EU and the IMF.
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