Monday, February 23, 2015

Greece Readies Reform Plans to First Sign of Leftist Unrest
Syriza Finance Minister is negotiating with the EU-ECB interests.
10:19am EST
By Angeliki Koutantou and Karolina Tagaris

ATHENS (Reuters) - Greece will present its economic reform plans on Monday to seal a euro zone financial lifeline, but the government drew criticism from a veteran leftist and ruling party member that the deal let voters down.

Germany, the biggest contributor to Greece's two bailouts totalling 240 billion euro, said any extra spending on Athens's list of reforms had to be offset by savings or higher taxes.

After a climbdown in Brussels to win the conditional four-month agreement, the government of Prime Minister Alexis Tsipras declared the reform list would at least be decided by Greeks, in contrast to the austerity policies dictated by foreign creditors since they bailed out Athens in 2010.

"The list will include a series of reforms that the Greek government will propose - and I underline that," said government spokesman Gabriel Sakellaridis. "Above all, they will be socially just reforms that aim to fight tax evasion, to fight corruption," he told Skai television.

Saying the list would go to Brussels before the end of Monday, Sakellaridis made clear Athens was anxious to avoid any last-minute hitches in securing the funding needed to keep Greece afloat and avoid an exit from the euro zone.

"We aim for this list to be accepted by the partners. This is why there are consultations and discussions with the partners so that there is a mutually beneficial solution," he said.

Tsipras has declared victory in Friday's deal, which is conditional on Greece's European and IMF creditors accepting the reform list, even though he had to accept an extension of the bailout programme he had promised to scrap.

But he drew withering criticism from veteran leftist Manolis Glezos, a Syriza member of the European Parliament who attacked the failure to fulfil Syriza's campaign promises and said simply avoiding inflammatory wording would not soothe the public.

The deal renamed the "troika" - despised inspectors from the European Commission, European Central Bank and International Monetary Fund who monitored Greek compliance with bailout commitments - "the three institutions".

"Renaming the troika as 'institutions', the bailout as an 'agreement' and creditors as 'partners' ... does not change the previous situation," Glezos wrote in a weekend blog.

"I apologise to the Greek people because I took part in this illusion," he said. "Let's react before it is too late."


Athens negotiated in Brussels under intense pressure. A senior banker told Reuters that one billion euros flooded out of Greek bank accounts last Friday alone. JP Morgan estimated last week's outflow at 3 billion, taking the total so far this year to 25 billion, and meaning the banks were on track to run out of collateral for new ECB loans in eight weeks.

Yields on bonds issued by the euro zone's more troubled members, Spain, Italy and Portugal, eased after the deal. "It's kicking the can down the road, but it's better than nothing and for the time being it will be seen as positive, assuming they can deliver these reform promises today," said Alan McQuaid, chief economist at Merrion Stockbrokers.

Greek markets were closed for a public holiday.

The reforms, which the Eurogroup of euro zone finance ministers will consider in a teleconference on Tuesday, aim to raise revenue in ways favoured by Tsipras's leftist Syriza party.

Following a series of testy Eurogroup meetings, the international creditors will scrutinise the reforms to ensure they comply with another of Greece's concessions - that nothing it does during the four months will burden the state budget.

"The ball is in the Greek government’s court," said German Foreign Minister Frank-Walter Steinmeier. "If Athens wants to see changes in individual points, then that is okay. But if these changes lead to further spending, then they need to save elsewhere or look to gather more revenue."

Steinmeier noted the Eurogroup deal extended the bailout programme that had been due to expire on Feb. 28 only until the early summer. "Europe has a chance to pause for breath – that’s all – this is not a solution," he told Bild newspaper.

A finance ministry official told Reuters the government wanted to raise two billion euros by tackling smuggling, including of oil, and also aimed to tax money from the black economy that has been sent abroad in recent years. It also planned to save about 1.5 billion euros by reducing the bill for government purchases by about 20 percent.

However, the official said these figures were subject to change before the final list is sent to Brussels.


With Greece unable to fund itself commercially, the opposition and fellow euro zone member Ireland say Tsipras will have to negotiate a third bailout when the extension expires.

The Brussels deal opens the possibility of lowering a target for the Greek primary budget surplus, which excludes debt repayments, freeing up some funds to help ease the effects of a long depression which has pushed unemployment to 25 percent.
But otherwise, Athens gained little.

The criticisms by Glezos so far stand alone: there have been no other signs of open dissent within Tsipras's party.

Tsipras now has to sell the Brussels deal and an eventual long-term agreement with the euro zone not only to voters but to Syriza's left wing and his junior coalition partner, the right-wing Independent Greeks.

While not a party heavyweight, Glezos does command moral authority. As a young man under the World War Two occupation, he scaled the Acropolis under the noses of German guards to rip down a Nazi flag and hoist the Greek flag, making him a national hero.

His decision to break ranks drew an abrupt response from the government. "Manolis Glezos is someone whom we will never cease to honour," said Sakellaridis. "But ... I believe that yesterday's statement in particular was misguided and wrong."

(additional reporting by Renee Maltezou and Lefteris Papadimas in Athens, Alexandra Hudson and Michael Nienaber in Brussels, and Jamie McGeever and Marius Zaharia in London; Writing by David Stamp; Editing by Sophie Walker)

No comments: