Friday, 16 December 2016

Greece's anti-austerity turn incurs creditors' wrath

This article was published by Al Jazeera International

ATHENS, Greece – Greece’s leftwing government has announced its first counter-austerity measures in over a year, only to incur the wrath of creditors and beneficiaries alike.

Prime Minister Alexis Tsipras was hard at work convincing his Eurozone partners at Wednesday’s European Union summit that his measures are affordable. They are now his biggest creditors, owning $220bn of Greek debt. They said on Tuesday that they were suspending debt relief worth $47bn, until Greece assures them it is toeing the line on agreed spending limits.

Meanwhile in Athens pensioners were furious that the government’s planned handout to them is paltry. Tsipras says he will spend $650mn on 1.6 million pensioners earning under $30 a day. Most of them earn less than the poverty level of $23 a day. Their pensions have been cut by between 20 and 50 percent since austerity began in 2010.

“I worked in construction for 42 years. I built Athens. It was a ruin, after the Germans and the Civil War,” says Thanos Tzobanos, who travelled from Karditsa in northern Greece to be at the rally. “We thought we were building a better world. Our reward is to go to hospital to die, instead of having the benefit of the sweat we put in for our children and grandchildren.”

With official unemployment still running at 22.6 percent, some studies find that about half of all households rely in whole or in part on income from pensions. Tzobanos’ pension was cut from 35 dollars a day to 20 - a living he shares with an unemployed son.

Despite the objections, parliament approved the handout by a two-thirds majority – far greater than the 153 seat government majority in the 300-seat chamber. The package also includes delaying a sales tax hike on eastern Aegean islands, which have born the brunt of the crisis.

The government says its handouts don’t cost more than 750 million dollars, and it can handily afford them because tax revenues this year are more than four billion dollars above target. That puts Greece in line to achieve a primary surplus of $7.8bn, far above the targeted $3.6bn. The government sees this handout, along with two and a half thousand new jobs in health and education on the islands, as a much-needed stimulus to the economy.

On December 5 the Eurozone lengthened Greece’s repayment on some of its debt and adjusted its interest. The measures fall far short of a 50 percent debt restructuring recommended by the International Monetary Fund, but they would achieve an estimated 20 percent reduction of Greece’s debt burden by 2060. All this has now been suspended pending a review of the latest measures.  

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