While Greek government officials insisted that a one-day delay in talks between Prime Minister Antonis Samaras and envoys of international lenders was due to undisclosed technical matters, other media reports said the negotiations on the release of a 2.8 billion euros ($3.64 billion) loan stalled primarily over the failure to begin reducing the public workforce.
The news agency Bloomberg said the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is sticking to demands that the government fire 150,000 workers over the next three years from a hugely bloated workforce.
That has become a sticking point as the Constitution does not allow for the government to lay off workers and three years of pay cuts, tax hikes and slashed pensions have not done enough to reduce the country’s staggering $460 billion debt. The uneasy coalition government overseen by Samaras, the New Democracy Conservative leader, also is eager to avoid political fallout that it would incur by firings of workers that are the main voting base for political parties.
The talks have gone on for more than a week, primarily with Finance Minister Yiannis Stournaras as the government’s point man. He has insisted the government can meet the targets to reduce workers by early retirements, attrition and getting rid of workers who are disciplinary problems, have faked their resumes, don’t show up for work and even committed felonies.
dentifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a 2.8 billion-euro ($3.6 billion) aid instalment due this month. More than a week of talks on that has so far failed to clinch an agreement.
“There are no complications, there are quite a few unresolved issues but because technical discussions are continuing with the troika teams, we thought it would be useful to allow for an extra day so the meeting (with the PM) can be effective,” Stournaras said, according to the newspaper Kathimerini.
The two sides have failed so far to agree on a range of issues, which include civil service firings, the continuation of the emergency property tax introduced in 2011 and the recapitalization of Greek banks. Samaras has also failed to convince the Troika to ease up on some austerity measures, especially a 23 percent Value Added Tax (VAT) that is killing the restaurant and tavern business. He also wants the tax on heating oil to be reduced because many Greeks can’t afford it, but that comes as winter is ending.
Greece and the Troika also appear far apart on the issue of how to get tax cheats to pay what they owe and for the government to make businesses pay social security taxes instead of keeping the money. Greece wants tax debtors to have more time to pay and for lenient reduced penalties for breaking tax laws.
Kathimerini said that the Troika wants debts to social security funds to incur annual interest rates of about 8.75 percent and for any payment plan to offer 36 installments from a fixed date rather than whenever debtors come to an arrangement with the funds. Samaras is eager to end the talks because the government also needs a further pending loan of 6 billion euros ($7.8 billion) as part of a second bailout of $173 bailout coming in series. A first rescue package of $152 billion has been expended.
There was speculation that a breakdown in talks could put further pressure on the government that includes the PASOK Socialists and the tiny Democratic Left, whose voter support has evaporated in the wake of their unrelenting support for austerity measures that are antithetical to their party principles.
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