Reform Deal Undone, But SYRIZA Proclaims Victory Over Lenders

Greece's Prime Minister Alexis Tsipras, left, speaks with EU Finance Commissioner Pierre Moscovici during their meeting at Maximos Mansion in Athens, Wednesday, Feb. 15, 2017. (AP Photo/Thanassis Stavrakis, File)

ATHENS – Claiming Greece’s era of austerity over, Prime Minister and Radical Left SYRIZA leader Alexis Tsipras now has to seal an unfinished deal with the country’s creditors before getting release of more monies from a long-delayed third bailout of 86 billion euros ($91.41 billion) to make it happen.

The government agreed with the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) to impose more austerity after 2019 but said it didn’t because the tough measures – including more pension cuts, dilution of workers’ rights and lowering the tax-free threshold – would be offset by taxes on the rich, a strategy which has not proved successful before.

Speaking in Parliament, Tsipras described the deal as an “exceptional success” and said it showed the country’s creditors accepted Greece’s insistence that it could no longer bear further budget austerity.

“I am fully convinced we achieved an honorable compromise,” Tsipras said, adding that all sides at the Eurozone finance ministers’ meeting in Brussels had agreed for the “first time after seven years … to leave the path of continued austerity behind us,” even though he will continue to implement it.

Greece agreed to legislate new reforms to come into effect after three international rescue packages of 326 billion euros ($344.30 billion) end in 2019, but said these will be fiscally neutral: for every euro’s worth of new burdens on the Greek taxpayer, an equal amount of relief will be granted.

In return, Greece’s creditors agreed to send their bailout inspectors back to Athens for further talks to complete a long overdue review of Greece’s progress in its bailout program.
Tsipras defended results of the Eurogroup meeting, saying, “We achieved an honorable compromise; for the first time it was decided that we leave behind us continuous austerity and redefine our priorities … it was a spectacular success by (the Greek) negotiating team,” – which has refused to reveal the details.

Tsipras said the Greek government will meet fiscal targets and successfully conclude a review of the third bailout terms agreed in July, 2015 “without further burdens for society.” He didn’t explain why pension cuts and taxing lower-income people wasn’t a burden on them.

Parliament President Nikos Voutsis told the newspaper Real News that the review will finish successfully for Greece and SYRIZA, which is plummeting in polls after reneging on anti-austerity promises and said the creditors “will be defeated” in the end.

Greek Prime Minister Alexis Tsipras speaks during a Parliament session about bailout negotiations in Athens, Friday, Feb. 24, 2107. (AP Photo/Thanassis Stavrakis)

“The review will close and those who want to lead the country to an (economic) asphyxiation this summer will be defeated because power relations no longer benefit them,” he was quoted as telling the paper. “The government must take legislative and programmatic advantage of the cracks in the program and the opportunities presented by the progress of the Greek economy,” he added.

Voutsis also attacked the International Monetary Fund and those politicians in Europe who still insist on harsh austerity and social exclusion, accusing them of “anxiously devising for months a balance of terror, which turns their compromises to antisocial reforms in our country,” the Athens News Agency said.

But Bank of Greece Governor Yannis Stournaras said the picture wasn’t as rosy as presented by Tsipra and SYRIZA officials.

“If the negotiations drag on with no agreement in sight, then Greece will enter a new cycle of uncertainty, deteriorating relations with our partners and creditors, and a backsliding of the economy into stagnation,” he told an audience at an Athens event.

He warned that risks “also arise from delays and procrastination in implementing reforms already agreed on, or from distortions to competition that could hurt crucial sectors of the economy.”

A good deal today between Greece and its creditors is preferable to a better deal later Alternate Finance Minister George Chouliarakis said in an interview with Kathimerini.
He said Greece will soon be allowed to be included again in the ECB’s Quantitative Easing program (QE) as soon as the review of its adjustment program is completed.

“So the completion of the deal is not only necessary to protect the economy from the dangers of uncertainty but is a valuable tool for an indirect pressure on our creditors, particularly at a time when the elections in these countries are working against us. Therefore, a good deal today is better than a better one tomorrow,” he was quoted as saying.

Chouliarakis said the completion of the deal will shift pressure from the Greek government to the institutions to take the necessary steps for the IMF to participate in the program and the Greek bonds to be included in QE.

“We believe the country will be included in the quantitative easing program of the ECB right after the completion of the agreement,” he said.

Main opposition leader Kyriakos Mitsotakis from the New Democracy Conservatives said Greeks deserve the truth after earlier noting that Finance Minister Euclid Tsakalotos refused to divulge details of the deal which remain secret.

“I neither invest nor rejoice in the government’s failure. I do, however, have a national obligation to tell the Greek people the truth promptly, with maturity, wisdom and responsibility, so that all sides can assume their responsibilities,” Mitsotakis said, ANA reported.

Greek society was sinking ever deeper into insecurity and uncertainty, ND’s leader said, and Greeks were seeking the truth about the real state of the country.

He accused the government of having committed to additional harsh measures, with higher taxes and lower pensions, while essential goals for avoiding a fourth memorandum, such as Greece’s inclusion in the ECB’s QE program and debt relief were fading away fast.

(Material from the Associated Press was used in this review)