ATHENS – There were no trumpets or fanfare as three international bailouts of 326 billion euros ($375.49 billion) for Greece ended, with Prime Minister Radical Left SYRIZA leader Alexis Tsipras going to the island of Ithaca
“The memorandums have ended; the country again regains the right to determine its fate,” Tsipras said, saying an eight-year “Odyssey” for the country ended although the economy will be monitored for years by the country’s creditors, the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM) and Washington, D.C.-based International Monetary Fund, to make sure fiscal targets are hit and that the Premier doesn’t renege on reforms to them the way he did on anti-austerity promises to voters.
Tsipras shown on TV the morning of Aug. 21 – the bailouts ended at midnight the night before – picking the backdrop of where the ancient Greek warrior Odysseys returned home after the Trojan War, Ithaca also being the title of a famous poem by Constantine Cavafy, alluding to a sense of “homecoming” and a journey equivalent to the destination.
Tsipras said the eight-year-long course was arduous, even as he piled on more austerity measures he swore he would reject, “but there was always a destination, even in the darkest hours … harsh austerity measures were taken, while democracy was affronted … bankers became prime ministers and prime ministers became bankers … the Greek people did not accept this fate, which was decided by others,” he said, casting blame on others.
The island is in the Ionian Sea west of the mainland, the opposite end of the country from Kastellorizo, the eastern Aegean island near Turkey where then-Premier and PASOK Socialist leader George Papandreou announced a first bailout of 110 billion euros ($126.7 billion) in 2010.
But Tsipras’ frequent boasts there would be a “clean exit,” were dashed by the creditors,
As soon as the bailouts expired though, the coalition government, which includes the pro-austerity, marginal, jingoistic Independent Greeks (ANEL) said it wants to now restore the minimum wage to previous levels, which Tsipras promised when he took office in January, 2015.
His office also said he wants to bring back collective bargaining, go on a hiring binge to help cut the unemployment rate, that he wants to somehow stop pension cuts he agreed that would begin on Jan. 1, 2019 – an election year – and undo coming taxes on previously exempt low-and-moderate income families and individuals.
There was no explanation how that could happen or how the government could afford to do it without breaking already-imposed reforms and austerity and whether the lenders would step in if he tries to go ahead, as they warned a debt relief deal giving Greece until
2060 to repay the loans would be revoked if he breaks the deal with them.
“Leaving the memorandum means redesigning the productive reconstruction of the country without the constraints of loan agreements,” Christos Vernardakis, who is responsible for the coordination of the government’s work, told the radio service of state news agency AMNA.
He said Tsipras would announce relief measures, including cutting taxes previously raised, when he speaks Sept. 9 at the Thessaloniki International Fair (TIF,) the venue where Premiers traditionally promise the moon to voters before usually breaking their promises after voters forget what they said.
He added that the purpose of the measures that Prime Minister Alexis Tsipras would announce at the Thessaloniki international trade fair would be to strengthen the middle class.
Among the measures that they government was considering was tax relief.
HAPPY DAYS ARE HERE AGAIN
Government spokesman Dimitris Tzanakopoulos said Greece and its people had entered a “new phase” and promised that “citizens will soon feel the difference,” without giving any specifics.
“The political freedom that the government has at the moment is much greater than what it had before,” he added although it is still bound by a memorandum it signed in the summer of 2015 to get a third rescue package of 86 billion euros ($99.06 billion) that Tsipras wants to wiggle out from under after his repeated reneging on anti-austerity vows had brought down his popularity.
The major rival New Democracy accused hi of “disastrous governance,” but European Union officials were near-giddy with joy that the bailouts were over and said the country has been saved with their help, while also warning Tsipras not to undo austerity
“With control comes responsibility. Greeks paid dearly for the bad policies of the past, so going back would be a bad mistake,” Eurogroup chief Mario Centeno tweeted, adding in an accompanying video that “economic growth has picked up, new jobs are being created and there is a fiscal and trade surplus.”
EU Financial Affairs Commissioner Pierre Moscovici said the reforms must stay in place despite any political cost and that also insisted that reforms must be adhered to, saying that “commitments have to be respected” when asked if there was any chance that there could be a suspension of pension cuts planned for January 1, 2019.
He said that the draft budget in October will show if there is any fiscal scope for changes.
Moscovici added that surveillance of Greece in the post-bailout era will ensure that the government delivers on reforms.
As Mocovici said envoys from the lenders would come to Greece again in September to check on progress in implementing reforms, the ESM said it’s going to keep an eye on Greece using an Early Warning System that ensures the country remains on track.
“For that purpose, the ESM will receive regular reporting from Greece and will join the European Commission for its regular missions under the enhanced surveillance framework,” the ESM said.
For up to 22 months, Greece can survive on a 9.5-billion euro ($10.94 billion) cash buffer from the last installment of 15 billion euros ($17.28 billion) from the third bailout but at some point will have to return to the markets at what could be a big cost.
Two previous test bonds of 3 billion euros ($3.46 billion) sold but at interest rates more than three times the bailouts and Greece will have to make payments of some 792 million euros ($912.24 million) a month for the next 42 years.
The initial response of the markets was to unmoved by the end of the bailouts, with Greek bond yields remaining essentially unchanged as Tsipras said a key to economic growth is getting foreign investors scared off by his tax hikes and the country’s constantly-changing tax system.
Constantinos Zouzoulas, Managing Director of the Research Division of AXIA Ventures Group, said Greece will have to regain market trust both through political initiatives as well as the country’s gradual return to the international markets, said Kathimerini.
However, in the short term and despite the completion of the program, government bonds will continue to be affected by the turmoil in neighboring countries, he said. This is because Greece, though it has no immediate exposure to Italy or Turkey, is considered a weak link.
(Material from the Associated Press was used in this report)