ATHENS – Apparently surprised when Germany, one of Greece’s key international lenders, blocked a 15 million euro disbursement that was the last installment from a third bailout of 86 billion euros, the ruling Radical Left SYRIZA of Prime Minister Alexis Tsipras now claims it knew that would happen, but didn’t tell anyone before it did.
Three international rescue packages of 326 billion euros will expire on Aug. 20, leaving Greece to the mercy of the markets and facing years of scrutiny from the lenders, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) and the Washington, D.C.-based International Monetary Fund (IMF) who don’t want Tsipras reneging on promised reforms as he did when breaking his vow to halt austerity before agreeing to more.
Germany, which put up the bulk of the monies, was upset that Tsipras exempted the islands of Lesbos, Chios, Samos, Kos and Leros that are overrun with 15,000 refugees and migrants from increases in the Value Added Tax (TAX) he implemented after swearing he wouldn’t.
He didn’t clear that with the lenders, and Germany’s block on releasing the last installment forced Finance Minister Euclid Tsakalotos to say the exemption would end on Dec. 31 although Tsipras had said it would be in place as long as the refugee crisis lasted.
After announcing the extension of the 30 percent VAT discount for the islands Tsipras said that the decision was made “with the understanding of (European Commission President) Jean-Claude Juncker, who has absolute knowledge of conditions on these five islands.”
But the EU isn’t the only player in the bailouts and doesn’t have the last word on approval witeh the ECB, ESM, and IMF all chiming in their unhappiness with what Tsipras did as the lenders are wary he’ll start backtracking on reforms after the bailouts end as he desperately tries to cling to power after plummeting in polls for reneging on anti-austerity pledges.
Germany said the Greek government will have to make up for the 28 million euros in lost taxes because of the VAT discount with cuts in some other areas, meaning taxpayers will have to foot the bill for helping the islands.
Tsakalotos said, however, the cuts will come in defense spending, going right after SYRIZA’s junior coalition partner, Defense Minister Panos Kammenos, leader of the pro-austerity, marginal, jingoistic Independent Greeks (ANEL).