Tough talks between Greece and its international lenders slugged on as the two sides on Nov. 19 remained far apart on key issues including how to close a looming budget gap – and how big it is – putting a damper on Finance Minister Yannis Stournaras’ always-optimistic predictions they were close to a deal.
Prime Minister Antonis Samaras must submit the 2014 budget to Parliament on Nov. 21 and wants an agreement with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) before then so that they will release a pending one billion euro ($1.37 billion) installment.
The schism though is critical because unless they can come to terms on closing a budget hope of as much as 2.9 billion euros – Stournaras said it’s only 500 million but a compromise of 1.3 billion is on the table – Samaras likely would have to renege on his promise not to impose any more harsh austerity measures that have worsened a deep recession. Reports were that Greece was digging in its heels with Samaras fearful of more social unrest if he breaks another pledge.
Stournaras and other key cabinet members involved in the talks reportedly told the Troika envoys that any more orders for pay cuts, tax hikes, slashed pensions and worker firings would be the last straw for society and the government and may not get through Parliament where Samaras’ New Democracy Conservatives and his partner, the PASOK Socialists, have only a four-seat majority.
Samaras and the major opposition party Coalition of the Radical Left (SYRIZA) leader Alexis Tsipras have been battling over austerity as the government’s rivals don’t want it although they haven’t offered any alternatives to continued bailouts from the Troika. SYRIZA said that coalition MP’s unhappy with the policies should “abandon the government,” drawing vehement criticism from government officials who accused him of trying to destabilize the country at a crucial moment.
Another big sticking point is a unified property tax that the government is still in the process of drafting, with the Troika estimating that the levy would bring in around 2.5 billion euros – 400 million euros less than the Greek side has calculated, Kathimerini said it was told by unnamed sources.
The Troika also is doubtful about claims from Labor and Social Insurance Minister Yiannis Vroutsis that up to 900 million euros can be raised through a more efficient crackdown on tax and social security evasion as the government has done little about that for years apart from a few well-publicized crackdowns that haven’t yielded a single major prosecution.
It’s beginning to look like a deal won’t be in place by the time Parliament gets a budget and that Greece and the Troika won’t have an agreement until the Dec. 9 meeting of Eurozone officials although it wasn’t said how that would affect the pending 2014 budget plans.
As Greek and Troika officials wrangled over economic reforms, German Chancellor Wolfgang Schaeuble, again repeated that the prospect of a second haircut to reduce Greece’s huge debt burden was out of the question. In his comments to Germany’s Bild newspaper, however, Schaeuble said that talks on a third, “much smaller” rescue package could be held if the country “meets its obligations.”
On his way out from the late evening meeting with the Premier, Stournaras explained that the changes brought to the real estate tax will burden the fiscal gap, but he was optimistic that it can be covered without resorting to wage and pension cuts. Stournaras also maintained that the unified payroll will be implemented and that there is no cash flow problem.