Saturday, 23 May 2015

Tsipras blasts creditors; talks at impasse

Greek premier Alexis Tsipras accused the country’s creditors of trampling on the agreed rubric of talks, and using financial pressure to push the country towards measures his government believes will cause further recession. 

“Some of our creditors are attempting to overturn the February 20 agreement,” Tsipras said to the central committee of his Syriza party, or Coalition of the Radical Left, on Saturday.

The agreement between Greece, on the one hand, and the European Commission, European Central Bank and International Monetary Fund, on the other, foresaw an interim agreement at the end of April, which would release 7.2bn euros’ worth of loan instalments to Greece. This would allow it to meet its commitments until a comprehensive agreement was reached at the end of June.

That deadline has come and gone without an agreement. Tsipras is saying that Greece’s creditors are driving his government towards a comprehensive agreement without releasing interim funds, in an effort to maximise their leverage.

“The non-payment of loan instalments to Greece is unacceptable and should not be happening,” Tsipras said. “If the cash starvation of Greece is our creditors’ tactic, it is totally ineffective.”

After missing an April 23 deadline, Tsipras’ government announced on May 3 that it was optimistic about an agreement being reached in May, without specifying when or what kind – interim or final. Since then there has been a Eurogroup meeting (May 11) and a summit of EU leaders (May 21-22) without any sign of an agreement; this despite the fact that Tsipras expressed optimism on May 22 after meeting with German chancellor Angela Merkel and French president Francois Hollande.

The consensus among financial experts is that Greece cannot pay its way through June without assistance. Apart form 2.5bn euros in salary and pension payments, it must meet several debt payments to the International Monetary Fund:

6 June: $300mn
12 June: $350mn
16 June: $580mn
19 June: $350mn

Key Issues

Tsipras said he would not go back on his word to refuse further cuts to pensions. “We do need to look at the viability of pension funds,” he said, “but not with further cuts. Instead we need to look at redistribution of wealth from the rich.”

Tsipras said pension funds lost 25bn euros in cash reserves when they were forced to accept a restructuring of Greek bonds in 2012. He called the move “criminal”, and said Greek officials would be called to account, indicating former finance minister and current socialist leader Evangelos Venizelos.

Tsipras also refused to give creditors satisfaction on labour deregulation. “Not only will we not further deregulate labour, we will bring back arbitration, a cornerstone of Europe,” he said. He also reiterated a promise to restore minimum wage to 731 euros a month.

An unelected prime minister, former central banker Loukas Papademos, deregulated labour in a highly contentious law in February 2012. The law dropped minimum wage to 586 euros a month, and abolished collective bargaining for each sector of industry. Syriza has vowed to revoke it.

A New Deal

Syriza has vowed to negotiate lower primary budget surpluses, which would be spent repaying debt. “The surpluses of 3 percent this year, 4.5 percent in 2016-17 and 4.2 percent in 2018, were based on austerity and are not implementable,” Tsipras said.

He reiterated his party’s commitment to a growth programme for Greece based on “low surpluses, redistribution of wealth and debt restructuring, plus a massive programme of investment in infrastructure and new technologies,” Tsipras said.

“We will rid the taxpayer of 10bn euros’ worth of austerity in the coming years with a lower primary surplus,” he said.

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