Greece, Troika Back To The Table

Heading for another round of tough negotiations: IMF mission chief to Greece Poul Thomsen (L) and Finance Minister Yannis Stournaras, who go head-to-head again.

ATHENS – Greece and its international lenders resumed tense re-negotiations on Nov. 18 on an array of long-delayed reforms blocking a one billion euro ($1.37 billion) installment and a sharp divide over the size of a looming hole in the 2014 budget that could revive new austerity talk.

That kicked off a big week for the coalition government of Prime Minister Antonis Samaras, who must submit the 2014 budget to the Parliament his administration controls on Nov. 18, a day before he goes to Berlin to meet German Chancellor Angela Merkel, whose country backs the aid but only on condition of continued harsh measures.

Finance Minister Yannis Stournaras, Samaras’ point man in the talks, has been at loggerheads with envoys from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) which says there is a 2.9 billion euro ($3.91 billion) budget gap while Greece says it’s only 500 million euros ($675.45 million) and can be filled with structural changes and going after tax cheats as well as social security cuts.

The government said that several of the unfulfilled so-called “prior actions” are far enough along for release of the money. Those include paying state debts to the Athens and Thessaloniki water companies, firing public workers and changes to the code for lawyers.

The last task, Stournaras said, is what to do about the country’s two defense industries: the Troika wants them closed or pared and the government, which critics said has used them as a dumping ground for patronage and argued they are money-losers, wants them kept open.

“If Greece has not at least completed the prior actions for the loan tranche approved in July, then Yannis [Stournaras] will have a tough time,” an experienced Brussels technocrat told Kathimerini.

There is also a big difference of opinion over other critical issues. The Troika wants the moratorium on foreclosures for homes worth less than 200,000 euros to end. The government, fearing more social unrest doesn’t want to do that, although Stournaras said he did. Also on the table is what to do about the lagging privatization program which has turned out to be a failure so far.

The final version of the budget could help Greece’s position in relation to the negotiations on the fiscal gap as it forecasts a primary surplus of 780 million euros for next year, compared to 344 million in the draft version submitted last month. Greece said that means it can stiff the Troika with big losses on the loans the same way it did to private investors and Diaspora bondholders in 2011.

Samaras will be talking with Merkel, whose country is the biggest contributor to $325 billion in two bailouts but who has insisted on continuing harsh pay cuts, tax hikes, slashed pensions and worker firings to insure banks are repaid, about the ongoing economic crisis and other issues.