Greece PM Accuses Creditors Of Criminality
Greece debt crisis
NEW DELHI: The Greek crisis has taken a fractious turn as Greece’s Prime Minister Alexis Tsipras accuses the country’s creditors of criminality. The deal that would secure funds for payment that Greece owes to the International Monetary Fund -- that at one point looked very achievable -- seems to be on the verge of falling through, as Greece hardens its rhetoric.
With just about 48 to go till a meeting between European finance ministers -- seen as the last realistic chance to reach the deal before Greece has to pay the IMF end June -- Tsipras shows no signs of backing down, in fact going as far as to accuse Greece’s creditors of “criminal” intent and of “humiliating” his country.
Tsipras said on Tuesday that the EU and IMF wanted to cut pensions and tax rises to "humiliate not only the Greek government... but humiliate an entire people". The IMF bore "criminal responsibility" for austerity measures that had plunged the Greek economy into recession, the Greek Prime Minister said.
Meanwhile, Jean-Claude Juncker, the European Commission President accused Tsipras and the Greek government of misleading the country. "I am blaming the Greeks [for telling] things to the Greek public which are not consistent with what I've told the Greek prime minister," Juncker said, adding that Tsipras had wrongly told the Greek people that the Commission and IMF were asking for a raise in VAT on electricity. "I'm not in favour, and the prime minister knows that, ... of increasing VAT on medicaments and electricity. This would be a major mistake." "The debate in Greece and outside Greece would be easier if the Greek government would tell exactly what the Commission... are really proposing," he added.
Greek finance Minister Yanis Varoufakis claimed that EU proposals did include VAT increases: "Juncker either hadn't read the document he gave Tsipras - or he read it and forgot about it” (as quoted in the BBC).
Signs of trouble first emerged a few days ago as a round of talks between Greek officials and lenders collapsed in 45 minutes. Greece’s current bailout agreement with creditors -- the IMF, European Central Bank (ECB) and European Commission -- runs out at the end of June, with haggling continuing on the release of the last €7.2bn in funds.
The EU wants Greece to make spending cuts worth €2bn to secure the deal. This includes a proposal to cut pensions -- something that Greece, which has had to budge on a range of issues, has refused to do.
Greek deputy Prime Minister Yannis Dragasakis said that Athens was still ready to negotiate with its lenders (as quoted in the BBC). Dragasakis added that the proposals submitted to the EU on Sunday fully covered the fiscal deficit as demanded.
Although both the EU and Greece maintain that progress has been made, the “significant gaps” that remain are becoming all the more of a bottleneck as the deadline to reach a funding deal with the EU and IMF is end June in order to avoid a default.
The fact that a compromise will be needed, with the Greeks having to yield even further, is evinced by Tsipras’s statement that the country will have to brace for a “difficult compromise.”
Greece has already compromised on a range of issues, thereby raising questions on the commitment of Tsipras’ left-wing Syriza party that was elected in January based on its promise to not compromise and thereby not accept the highly unpopular austerity measures, increase the minimum monthly wage and create more jobs.
At 40, Tsipras is the country’s youngest Prime Minister since 1865. Tsipras “Coalition of the Radical Left” -- known colloquially by its acronym SYRIZA -- won the January 25 polls and went on to become the winning coalition getting 36.3 percent of the popular vote and 149 out of 300 seats in the Hellenic Parliament.
The meteoric rise for Syriza, with the party polling at 5 percent in 2010, was largely due to the anti-austerity position of the party, which promised to renegotiate Greece's €240bn (£179bn; $270bn) bailout by international lenders.
Soon after the results, Germany and Netherlands led warnings to the new anti-austerity Greek government about rolling back budget cuts meant to get spending under control. “Germany bears no responsibility for what happened in Greece,” Volker Kauder, the parliamentary caucus leader of German Chancellor Angela Merkel’s Christian Democrats, told reporters in Berlin. “The new prime minister must recognize that.”
“The message ‘we want your support but not your conditions’ won’t fly,” said Dutch Finance Minister Jeroen Dijsselbloem. “My message will be that we’re open to cooperation but that the support from Europe also means the Greeks have to make an effort.”
Meanwhile, the head of the European commission, Jean-Claude Juncker, cautioned that a reduction in the country’s debt was “not on the radar”. The EU issued a statement reiterating that Greece would risk its place in the eurozone if it failed to meet its austerity and debt commitments.
At first, all signs seemed to indicate that Tsipras would not budge from his election promise of renegotiating the debt. The biggest sign was the appointment of the new cabinet, with appointments indicating that the new leader was going to be unwilling to back down from pledges to dismantle punitive belt-tightening measures. Yanis Varoufakis -- a radical economist who has described austerity programmes as “fiscal waterboarding” -- was given the post of Finance Minister. Economist and veteran left-wing politician Giannis Dragasakis was appointed Deputy Prime Minister, and tasked with overseeing negotiations with the “troika” of the European Commission, the IMF and the ECB. The 39 member cabinet is in fact dominated by academics leaning toward the left.
However, since then, Greece has only compromised. The government soon agreed to a financial rescue programme with eurozone countries. Before the deal had been reached, Tsipiras had declared that "we will not succumb to psychological blackmail,” and “we are not in a hurry and we will not compromise.”
Soon after the deal was announced, one veteran member of the Syriza movement, Manolis Glezos, complained that agreement represented a reversal of the party’s electoral position. “I apologise to the Greek people because I have contributed to this illusion,” Glezos posted online. “Renaming the Troika as ‘institutions’, the bailout as an ‘agreement’ and creditors as ‘partners’... does not change the previous situation, as in the case of renaming meat as fish,” Glezos wrote in a statement that accuses the Greek government of working with the Troika.
Gabriel Sakellaridis, a spokesperson for the Greek government immediately countered the statement. “Manolis Glezos is someone whom we will never cease to honour but... I believe that statement in particular was misguided and wrong.”
This was followed by the first major policy decision of the new government in the form of a reform summary in February. The main points of the summary included:
1. Creating a fairer tax system
2. Combating tax evasion
3. Tackling corruption
4. Targeting fuel and tobacco smugglers
5. Implementing labour reforms on collective contracts and bargaining agreements.
6 Tackling Greece's "humanitarian crisis" with housing guarantees and free medical care for the uninsured unemployed.
The compromise was evident when contrasted with what Greece wanted.
What Syriza wanted:
1. Overhaul of the bailout and its onerous austerity terms.
2.No more co-operation with the Troika of the European Central Bank, the European Commission and the International Monetary Fund.
3. A reduction in the debt owed to the rest of the eurozone and profits transfer from the ECB’s sovereign bond purchase programme.
4. Reduce requirement for Athens to run large budget surpluses indefinitely.
5. Increase in the statutory minimum wage from €530 a month to €751 and end to privatisations.
What Syriza got:
1. Four-month extension of existing bailout.
2. Agreement to work in “close agreement” with creditors (ie the Troika).
3. No debt write-off but conditional promise of future transfer of central bank bond purchase profits to Athens.
4. Reduction in required 2015 budget surplus.
5. No unilateral changes to policies, meaning minimum wage and other spending pledges up in the air.