The government’s optimism on the issue of debt and the second review is once turning out to have a boomerang effect. In relation to the debt, all of the Prime Minister’s talks at the summit suggest that the affair will take some time and will not be resolved before the German elections. It is no coincidence that the Prime Minister suddenly lowered the expectations and began talking about short-term measures and the ECB’s quantitative easing program.
The first talks with the troika on the review revealed the huge distance between government expectations and creditor demands. The differences in all issues that were opened are major. With regards to the labor market, the relevant minister admitted that the troika’s positions often exceed the red lines that he himself set. The same goes for benefits and social policy, which are supposed to be government’s counterweight to the harsh measures it has taken.
Even the budget, which the government considered to have achieved its goals, the troika is raising issues. It is clear then that the negotiations for the review will not be a walk in the park as government officials believed, but rather a painful marathon. The Prime Minister and his ministers do not seem to have learned the lesson from the previous governments and thought that with a few tricks and promises they could convince the troika and their political supervisors.
So once again it seems that we will experience a dramatic tug-of-war, with the conditions not being favorable for the government. With the political climate somber due to the institutional interventions and society turning its back, the troika being indifferent towards the political negotiation, the next couple months will be tense.
Worst of all though is that neither the economy nor society can endure any pointless political games. Because as long as the country does not enter a path of political and economic stability, growth will never come. The question is whether the Prime Minister and his officers are aware of this…
TO VIMA
