New York Times: Strong Doubts about the Prospects of Last Week’s Greek Deal

Athens.- The agreement is viable,” Prime Minister Antonis Samaras was quoted as saying in an interview published on Saturday by an Athens weekly, in reference to the recent Eurogroup decisions. He also noted that if the country implements necessary reforms, no more cutbacks in salaries and pension will be taken.

Samaras added that a bonds buy-back process does not concern pension funds and that the money channeled into the market in 2013 is greater than austerity measures. He pointed out that greater liquidity is the goal in order to reverse the vicious circle of recession.

Moreover, Samaras again indirectly attacked the so-called “drachma lobby” in Greece and abroad, saying that if the country exited the eurozone the situation would worsen, with even harsher measures then necessary.

Referring to his political opponents, the prime minister said he feels ashamed that certain politicians clearly demonstrated that they would have preferred a failure last week in Brussels, terming as “malicious” the criticism that the eurogroup solution is not final.

“Those claiming that the country will be turned into a debt colony are ridiculous,” he concluded.

His interview was published in the Sunday weekly “Proto Thema”.

A “NY Times” editorial on Saturday points out that last week’s deal in Brussels “regrettably, it excludes more effective tools, like actual debt write-downs, which Germany’s chancellor, Angela Merkel, finds politically unpalatable. And in deference to Ms. Merkel, the deal postpones some of the promised relief until after German elections next September.”

According to the “New York Times Editorial”, “its biggest mistake is conditioning relief on maintaining fiscal austerity. Greece’s only hope for long-term solvency is through aggressive measures to revive economic growth. These could include public investment in modernizing ports and infrastructure, tax cuts to encourage export industries, and better public education. Done right, such measures would more than pay for themselves by improving Greece’s competitiveness in global and European markets. The bailout deal should keep Greece financially solvent for the next few months, but the price could prove too much for Greece’s economy and society to bear.”

NY Times disputes the triumphant reaction of the Greek government and it warns about the possibility of a government collapse.

“Greece’s Prime Minister, Antonis Samaras, hailed this week’s debt agreement as the transformation of “endless austerity” into a program that “will lead to growth.” Unfortunately, it promises nothing of the kind, and Mr. Samaras’s fragile coalition shows signs of fracturing under the economic strain. It might not even be able to stagger on until the German election next year. If it falls, Greece could be headed for default and exit from the euro. That catastrophe can still be avoided — but only if Ms. Merkel decides to put the survival of Greece and the future of the European Union ahead of her own electoral calculations.”


Finance Minister Yannis Stournaras is due in Brussels again on Monday – for the fourth Eurogroup meeting in as many weeks – where he is expected to present to his eurozone peers details of a bond buyback scheme that must succeed if Greece is to clinch a crucial tranche of rescue funding later this month. IMF chief Christine Lagarde won’t participate, although he was in Paris until yesterday.

Despite the expressed reluctance of Greek banks to participate in the buyback, the aim of which is to reduce Greece’s debt burden by 20 billion euros, they are expected to join the scheme as they cannot afford to miss out on recapitalization funds earmarked for them in the next 34.4-billion-euro tranche of rescue loans.

Stournaras has insisted that the scheme is voluntary but has sought to apply pressure on banks and other bond-holders by stressing that its success is “a patriotic duty.”

He is to return to Brussels for another Eurogroup summit on December 10, where the participation in the scheme is to be assessed before a decision is made on the release of rescue loans to Greece by December 13.

In the meantime the minister faces a grueling week at home. His draft tax code – which abolishes breaks for large families, self-employed professionals and farmers – must be submitted in Parliament soon. It is one of a handful of remaining “prior actions” demanded by the troika in exchange for continued financial support. But the new legislation faces opposition not just from the junior partners in the coalition – socialist PASOK and Democratic Left – but also from several conservative lawmakers, meaning its passage through Parliament is unlikely to be smooth. Stournaras has said he will consider countermeasures as long as fiscal targets are respected.

According to sources, the government is keen to finish with the bond buyback and secure crucial funding so the focus can shift to the repayment of state arrears and the acceleration of privatization projects. A cabinet reshuffle is expected before Christmas with PASOK and Democratic Left expected to appoint several cadres to key posts. Certain ministers who are resisting reforms – such as Administrative Reform Minister Antonis Manitakis who opposes a fast-track redundancy scheme for civil servants – are likely to go.

There are fears that if all does not go according to plan and the government finds itself forced to take new austerity measures early next year, the coalition will buckle under the strain and snap elections will be called. Already, leftist SYRIZA, which is leading in opinion polls and opposes the terms of Greece’s foreign bailouts, is planning for such an eventuality with speculation about elections featuring at its party congress over the weekend.

Meanwhile European officials sought to bolster the battered image of Greece, ahead of yet another Eurogroup summit. “At last, I can see in the Greek government the determination to overhaul the country, to create modern structures,” German Chancellor Angela Merkel told Bild. European Economic and Monetary Affairs Commissioner Olli Rehn, for his part, said he was confident that Greece would receive rescue funding without delay.


“The minimum patriotic duty of a coalition government with mandate for the renegotiation and disengagement from the Memorandum is not to accept a repetition of the same disastrous choices,” main opposition SYRIZA leader Alexis Tsipras was quoted by the Athens daily “Ta Nea” on Saturday.

Tsipras said the government should not accept the “looting” of social security funds in order to buy back bonds and use it as a pre-election campaign “gift” to German Chancellor Angela Merkel.

The SYRIZA leader also opined that as long as the recession escalates “semi- measures” for the debt will last for only three months.

Alexis Tsipras said on Friday The Radical Left Coalition (SYRIZA) is ready to assume Greece’s reins of power and succeed, “despite the fact that it will happen under the worst conditions, ones of economic ruin and social dissolution.”

Tsipras described SYRIZA’s role in shaping a new political scene, as he said, as well as the influence it aims to exercise under such new conditions, while he linked the target of assuming the country’s governance with SYRIZA’s current activity in society.

“We are creating a party that’s a part of society and not part of the state and the system,” he said, while attacking the government and the prime minister, specifically, predicting more decreases in salaries and pensions.

In criticising the government, Tsipras said that “in reality, it is not ruling, it pretends to rule”, since it is following the policy of “whatever the creditors say”.

Tsipras said Samaras “is pretending to be prime minister, having delivered the keys to the (EC-ECB-IMF) troika and ministers, who themselves admit are merely called on to sign decrees and laws that others prepare.”

He also expressed regret that the Communist Party (KKE) had “not differentiated itself” from the government — it would have “made a great political reversal, benefiting workers and the people, a reality.”

Finally, Tsipras expressed certainty that social insurance funds will be “losers once again”, claiming that their assets will be threatened with a second drastic ‘haircut’, as he again predicted that “the new measures will come for even greater decreases in the (current) pensions of starvation”.

A framework that will boost the real economy and lead to an exit from the crisis in the wake of recent Eurogroup decisions was emphasised on Saturday by PASOK leader Evangelos Venizelos, who addressed a conference of his party’s organising committee in downtown Athens.

Venizelos noted that changes in the tax regime should not include an abolition of tax breaks for children, adding that “we will heal” the injustices in the law regarding disability pensions and the payment of the civil servants retirement lump sums.

The PASOK leader sternly attacked main opposition SYRIZA leader Alexis Tsipras, saying the latter ‘is ignorant of the danger” and that with his statements undermine investment prospects in the country, something Venizelos called “suspicious and deplorable”.

Referring to PASOK’s initiatives in the coming weeks, Venizelos said that on Monday PASOK will present its proposal to declare the ultra-nationalist Chryssi Avghi (Golden Dawn) party unconstitutional”.

Moreover, he added that a prerequisite for national recovery is that the current government completes its four-year tenure, while in the meantime operating with coordination, stability and with clear rules regarding not only the three-party majority but also within the government, in statements carried by the Saturday edition of “Ta Nea

Democratic Left (DI.MAR) leader Fotis Kouvelis on Saturday expressed his disagreement over tax hikes and elimination of tax breaks, particularly the abolition of breaks for families with children, noting however, that a final decision has not been taken.

Moreover, he said that in the next days a draft law for over-indebted households will be completed, explaining that “the target is for no one to have to pay more that 30 percent of his total income”.

Prospective new tax measures introduced by the government target workers, not large businesses, and are permanent, the Communist Party (KKE) charged on Friday.

KKE said “the extraordinary surtaxes and the new tax noose introduced by the coalition government – targeting mainly the workers, the poor, the small business owners and the farmers, while large business interests enjoy new tax exemptions – will not be temporary in nature.”