Big Week Looms for Greece

Greek Prime Minister Antonis Samaras‘ coalition government, which has only a four-vote majority in the 300-member Parliament, faces a tough week including renegotiations with its international lenders over delayed reforms and a looming budget gap before it’s submitted to Parliament on Nov. 21  and as the Premier goes to Berlin to meet German Chancellor Angela Merkel the next day.
Envoys from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) are due to hold talks on Nov. 18 with Finance Minister Yannis Stournaras the two sides dispute the size of a budget hole for 2014. The Troika puts it at as much as 2.9 billion euros while Stournaras said it’s only about 500 million euros.
Unless an agreement is reached on the wide ranging of long-delayed reforms, the Troika won’t release a pending one billion euros installment. Stournaras is set to argue that the government is making progress, a repeated tactic to buy time.
The government said that several of the unfulfilled so-called “prior actions” are far enough along for release of the money. Those include paying state debts to the Athens and Thessaloniki water companies, firing public workers and changes to the code for lawyers.
The last task, Stournaras said, is what to do about the country’s two defense industries: the Troika wants them closed or pared and the government, which critics said has used them as a dumping ground for patronage and argued they are money-losers, wants them kept open.
“If Greece has not at least completed the prior actions for the loan tranche approved in July, then Yannis [Stournaras] will have a tough time,” an experienced Brussels technocrat told Kathimerini.
There is also a big difference of opinion over other critical issues. The Troika wants the moratorium on foreclosures for homes worth less than 200,000 euros to end. The government, fearing more social unrest doesn’t want to do that, although Stournaras said he did. Also on the table is what to do about the lagging privatization program which has turned out to be a failure so far.
The final version of the budget could help Greece’s position in relation to the negotiations on the fiscal gap as it forecasts a primary surplus of 780 million euros for next year, compared to 344 million in the draft version submitted last month. Greece said that means it can stiff the Troika with big losses on the loans the same way it did to private investors and Diaspora bondholders in 2011.
Samaras will be talking with Merkel, whose country is the biggest contributor to $325 billion in two bailouts but who has insisted on continuing harsh pay cuts, tax hikes, slashed pensions and worker firings to insure banks are repaid, about the ongoing economic crisis and other issues.