The Greek government may claim to be confident of soon coming to an agreement with its creditors, however the recent Eurogroup in Latvia left a bitter taste, with the decisions for Greece to be taken in Brussels.
In Latvia the Eurogroup chief Jeroen Dijsselbloem demanded the return of the troika in Athens, that a package deal be agreed upon (rather than a midterm deal, as set out in the 20 February agreement) and for the government to take back its 100 installments debt settlement and labor bill.
As such, the government was unable to come to an agreement, with the Greek Minister of Finances Yanis Varoufakis reportedly taking a beating from his European colleagues. This prompted Prime Minister Alexis Tsipras to carry out some changes, in order to convince the creditors of his resolve; Alternate Minister Euclid Tsakalotos was given greater power, while a negotiation team was set up under Giorgos Houliarakis, and Spyros Sagias has undertaken the role of coordinating the legislative efforts.
The negotiation team, along with two of the PM’s advisers and other government officers, will be in Brussels, in an effort to document everything that is necessary to close the previous program and finalize the conclusions of the infamous fifth review, which was meant to be complete in September by the previous government. It is believed that the Greek government will strive for a compromise deal by the end of the week, in order to overcome the dramatic economic situation.
On the international front the government has few allies, with the European Commission being one of the few to continue to support Greece. On the domestic front, various elements within the government favor a “rupture” further complicating the negotiation efforts. As such after 100 days in power the government has yet to come to an agreement and is in danger of “sudden death”, namely from an internal default or a credit event, should it miss the IMF payment in May.
With time quickly running out for the government, plans have been drawn up for the first bill of fiscal and tax measures, which the partners have accepted on a technical level, in order to confirm the midterm agreement. This draft will be debated at Thursday’s Ministerial Council, but it will not be enough to unlock a significant amount of funding. The Greek government will essentially have to meet conditions set out in the previous bailout program.
According to sources in Brussels, Greece’s creditors have demanded that the following from the government; to postpone restoring the Christmas pension bonus for 2016 and to drop plans of raising the minimum wage to 751 euros. They propose to allow employers and employees to decide together on wages. In exchange, the creditors will not object to other “red lines” set up by the government, which has refused to further reduce supplementary pensions and merging funds, as well as refusing to introduce legislation on collecting redundancies.
