With an end-of-the-week deadline, the coalition’s busily hacking away, hoping to come up with cuts that will please the Troikarchs. We’ve got the demands as well as some of the incisions already made. Then there’s the finance minister’s prediction of a 25 percent economic contraction, another ominous sighting of light at the end of the tunnel, some questionable claims from the health minister, rare praise from a German, and Bulgarian healthcare poaching
University students will find closed departments, high tuition, and costly textbooks, while the government’s privatization manager is poromising a bonanza for foreign investors, bondholders raise warnings, labor costs are growing “competitive” [and some numbers explaining why], forest falling prey to Greeks who can’t afford heating and cooking fuel, more racism worries, and the sad story of death by austerity.
Cuts package nearly done, minister says
Those major budgets cuts demanded by the Troikarchs after their rejection of a large part of the package assembled by increasingly nervous coalition is almost done, declares the finance minister.
From Agence France-Presse:
Greece’s finance minister said Tuesday that Athens is close to sealing a deal with its international lenders on fresh austerity measures in exchange for billions of euros in aid funds.
“I hope that by Sunday (the package will be finalised), we don’t have much time,” said Finance Minister Yannis Stournaras after a three-hour meeting with Prime Minister Antonis Samaras.
The negotiations are “difficult” but with about two thirds of the austerity programme already finalised, Greece is on the right path and close to sealing a deal with its international lenders to unlock crucial aid funds, he said.
Read the rest.
More from an earlier Athens News story:
The government still has to identify 4bn euros’ worth of the 11.9bn euros of cuts required by the troika, the finance minister told representatives of the three coalition parties on Monday.
Yannis Stournaras met with party representatives to brief them on the progress of his negotiations with the troika in order to finalise the measures that will make up the spending cuts package.
Party officials said that the main points of contention with the troika concern the 750m euros of cuts proposed for state operational costs and a large chunk of the cutbacks in health and defence.
One party representative, who attended the meeting with the troika, remarked that the measures proposed by the government were not enough for the troika, which was seeking “even more blood”.
The party representatives said that Stournaras gave them the impression that the package of measures had to be finalised by Sunday.
They added that the two-year increase in the retirement age to 67 is inevitable and so are deep cuts in pensions and benefits, and public sector layoffs.
Read the rest.
And more context from ANSAmed:
Greece’s Finance Minister, Yiannis Stournaras is continuing to meet with representatives of Greece’s international partners in order to finalize an 11.5 billion euro cuts package requested by the Troika in return for 31 billion euro of financial aid. Without it, Greece faces bankruptcy. Stournaras will today meet with the head of the the European Union task force for Greece, Horst Reichenbanch, to discuss the budgetary cuts and assess the progress of economic reforms.
A trimestral task force report is then sent to the Greek government and international creditors.
On Wednesday Stournaras again meets with Troika representatives – Matthias Mors (European Union), Klaus Mazuch (European Central Bank) and Paul Tomsen (International Monetary Fund). Following this he will meet leaders of the political parties supporting the Samaras government to finalize the austerity measures included in the new package.
And what does the Troika demand?
Here’s a quick synopsis from John Psaropoulos for Al Jazeera.
The European Commission, the European Central Bank and the International Monetary Fund, have asked Greece to pass 2013-2014 budgets in October which eliminate the annual deficit in three key ways:
- The public payroll must come down by at least 1.5 percent of GDP, producing savings of about $3.7bn. This requires laying off or retiring at least 150,000 people.
- Government operating costs must come down by 1 percent of GDP by moving out of leased properties, abolishing hundreds of committees and public entities that produce nothing, and even outsourcing some government functions. The troika says this could produce savings of about $2.5bn
- Spending on pensions and healthcare must come down by 3 per cent of GDP, producing savings of about $7.5bn.
These spending cuts must be put to parliamentary vote by October 1.
The reason why they are so heavily focused on essentially two areas – social spending and state administration – is that these claim a disproportionate amount of the budget. Out of this year’s 88 billion euro budget, 18bn will go to state salaries and 35bn to topping up pension funds, the finance ministry says.
Read the rest.
And what has the Samaras coalition proposed?
Here’s a start, from a longer summary by Panagiotis Sotiris for Greek Left Review:
This package has been presented to the Troika representatives in order to be approved by them so that 31 billion euros of bail-out funds will be released and the Greek state saved from bankruptcy. It includes:
- Cuts in the funding of Ministries, that will make them almost impossible to function properly.
- A slashing in social spending, that includes reductions in family benefits, in special unemployment benefits for seasonal workers and other social benefits, including funding for travel expenses for patients receiving dialysis.
- A new wave of personnel reductions in the public sector, by forcing thousands of civil servants close to retirement age to enter “pre-retirement status” at reduced wages, by not rehiring public sector employees on limited term contracts (e.g. substitute teachers or adjunct faculty), and by reducing the total number of public sector institutions.
- New cuts in pensions and public sector wages. The cuts in pensions will not simply deteriorate the quality of life for senior citizens. They will deprive families of an income that was instrumental in sustaining forms of intergenerational solidarity.
- A massive new wave of privatizations.
- Cuts in health spending, in a period when Greece is very close to a humanitarian crisis. These cuts will jeopardize the ability of many hospitals and clinics to function properly and will lead to a deterioration of the quality of health services and a reduction in total health coverage.
- The reduction of the total number of Universities, University departments and Higher Education Institutions, through a process of “spatial restructuring” of Higher Education.
- The freeze in hiring in all levels of education, mass lay-offs of adjunct faculty, new education budget cuts – including the abolition of the gratis provision of university textbooks –, and increased tuition for graduate courses.
- Reduced funding for culture and the Arts
Read the rest.
Another grim ministerial prediction
Even with the additional bailout cash, the near-term future is looking bleak, according to the finance minister’s calculations.
From the Economic Times:
Greece’s economy will have contracted by 25 percent by the time the recession ends, the finance minister said Tuesday, as the government remained locked in talks with rescue lenders for its next major austerity program.
Yannis Stournaras made the remarks at a Greek-Chinese business forum, before senior officials from his ministry resumed negotiations with inspectors from the European Union, European Central Bank and International Monetary Fund, known as the “troika.’‘
“The cumulative reduction (of gross domestic product) since 2008 is just under 20 percent and is expected to reach 25 percent by 2014,’‘ Stournaras said.
Read the rest.
More from the London Telegraph:
Speaking to a Greek-Chinese business forum, he said that Athens would broadly meet a target of cutting the 2012 primary deficit, excluding debt servicing costs, to €2bn in nominal terms.
But, he said the primary deficit figure would reach 1.5pc of gross domestic product, compared with a previous estimate of 1pc, as the recession bit.
With the Greek government remaining locked in talks with rescue lenders as they evaluate Greece’s progress before releasing its next tranche of aid, Mr Stournaras pleaded for more time from the European Union and International Monetary Fund troika.
“Otherwise, there is a great risk of prolonging the negative consequences for the economy and society,” he warned.
Read the rest.
Oh noes! More ‘light at the end of the tunnel’
We’ve noted how this phrase was twice used by Western leaders hailing the imminent approach of “victory” in Vietnam, once by the French commander shortly before the disastrous battle of Dien Bien Phu, and again by President Lyndon Johnson in 1966.
Ominously, it’s also become the favorite phrase of europols of late when referring to Greece and the larger crisis.
And here it comes again.
Germany’s foreign minister on Tuesday said he saw “light at the end of the tunnel” in efforts to tackle the lingering eurozone crisis.
“We must look beyond the present and now also hold a debate about Europe’s future in a committed way,” Guido Westerwelle told Germany’s Sueddeutsche Zeitung.
“It’s about making Europe better and creating new confidence in Europe,” he added.
Meanwhile, Finland’s Europe minister Alexander Stubb on Tuesday appeared skeptical of European Commission President Jose Manuel Barroso’s calls last week for a change to the EU’s treaty.
“If treaty change is needed, then it must be done. However, I am slightly skeptical as to the real need for treaty change and also cautious about its feasibility,” said Stubb, who is Minister of European Affairs and Foreign Trade.
Read the rest.
Doctoring the image of unhealthy reality
The health minister says major cuts to the healthcare system won’t deprive the sick of care.
Some Greek cancer patients disagree.
From Oliver Joy and Irene Chapple of CNN:
Greece is being asked to make “great sacrifices” but the country’s sick Continue reading