After Passing Reforms, More Austerity, Greece Will Get 11B Euros

Greece's European lenders are ready to reward Prime Minister Alexis Tsipras with 11 billion euros from a third bailout for passing reforms.

ATHENS – Greece’s European lenders are ready to reward Prime Minister Alexis Tsipras with 11 billion euros from a third bailout in return for reneging on anti-austerity promises.

Tsipras, the Radical Left SYRIZA leader, came to power last year on the back of promises to reverse pay cuts, tax hikes, slashed pensions, worker firings and privatizations but agreed to implement more, completing his surrender to the creditors.

The Quartet of the European Union-International Monetary Fund-European Central Bank-European Stability Mechanism (EU-IMF-ECB-ESM) last year approved a rescue package of 86 billion euros ($96.44 billion) but has withheld most of it until Tsipras rammed more austerity, including pension cuts, through Parliament.

The new monies are ready to be disbursed, the Bloomberg news agency reported but will be used mostly to repay the same lenders providing the rescue package and 240 billion euros ($269.12 billion) in two previous bailouts.

The funds will be used to clear arrears and to cover debt servicing needs, including a 2.3 billion-euro ($2.58 billion) to the ECB in July, according to a draft of the European Commission’s compliance report for the Greek economic program seen by Bloomberg.

Of the 11 billion euros Athens may receive, 7.2 billion euros will go towards covering debt servicing costs and the remaining 3.8 billion euros will be used to reduce state arrears, leaving nothing for a Greek society hammered by big pay cuts, tax hikes, slashed pensions and worker firings.

Successive Greek governments, in a desperate bid to keep the economy from collapsing, have embarked on a strategy of seeking successive loans from the creditors to repay previous loans and the borrowing again to pay even more loans.

Only about 5 percent of the money borrowed since 2010 has gone to help the people of Greece and the rest used to pay back banks and for other uses.

The price has been harsh austerity that has created record unemployment and deep poverty and a lower standard of living for most Greeks, apart from tax cheats, the rich, politicians and those exempted from austerity, such as the military, diplomats, university professors and Parliament workers.

The disbursement would cover Greece’s funding needs until the end of November this year when it will need more money and talk hasn’t relented of a fourth bailout at some point.

Tsipras, reneging on another promise, also agreed to automatic spending cuts if Greece fails to meet fiscal targets, which it always has.

The compliance report also proposes a range of measures to provide Greece with debt relief, such as locking in low interest rates and extending the grace period and loan maturities but no debt cut as Tsipras said he would also get in return for caving in.