The Guardian
Greece‘s new coalition government has outlined the concessions it hopes to exact from Europe‘s leaders on its €130bn bailout package, as its two top politicians receive hospital treatment.
With a crucial summit between European leaders set for Thursday and Friday in Brussels, the Greek government said it would press for an extra two years’ grace to meet the tough deficit targets laid down in the bailout deal, and was hoping to reverse cuts in the minimum wage and cancel planned civil service layoffs.
“The general target is for there to be no further reductions in wages or pensions and no more taxes,” said a statement made by the three parties that make up the new coalition.
Unemployment benefit would be paid out for two years instead of one under the coalition’s plans, to ease the distress caused by the country’s high unemployment rate, which is running at more than 20%.
It will press ahead with the €50bn of privatisations demanded by Greece’s creditors, but would like part of the programme to take place through public-private partnerships instead of outright sales.
Prime minister Antonis Samaras had an emergency operation on Saturday to repair a damaged retina, while his finance minister, Vassilis Rapanos, was kept under observation in hospital after collapsing on Friday.
But even as Samaras recovered from his operation, the statement showed that he and his colleagues can expect to receive a rough ride when they confront the country’s creditors this week.
Samaras beat the anti-austerity Syriza party in a close-fought general election – the second in six weeks – on 17 June. But his New Democracy party won with a promise to fight for less stringent conditions on the aid Greece receives from its eurozone partners and the International Monetary Fund.
German chancellor Angela Merkel has made it clear that she has no intention of renegotiating the Greek package, which was agreed in February after weeks of talks – though Europe’s leaders may fear the reaction of Greece’s voters if they fail to offer them anything.
Simon Derrick, currency strategist at BNY Mellon, pointed out that Athens’s position was weak because it urgently needs the next tranche of bailout money, which the “troika” of the European Central Bank, IMF and European commission will only release if it is satisfied that the country is complying with its austerity programme.
“They don’t have the luxury of entering into protracted negotiations: they don’t have any bargaining power,” he said. “I think they lose – I think the troika wins. The key question is, how do the Greek public react to that?”
Finance ministers from the 17 member countries of the euro met in Luxembourg on Friday in the latest attempt to thrash out a package of measures to underpin the single currency, while the leaders of Germany, Spain, France and Italy gathered in Rome.
The leaders again announced a pledge to redirect 1% of the EU’s budget towards promoting growth; but there appeared to be little consensus on more radical measures, such as allowing the eurozone bailout fund, the European financial stability facility, to buy up the bonds of distressed countries such as Spain and Italy in the financial markets and bring down their borrowing costs.
Spain, which has been forced to ask for a €100bn loan from its eurozone partners to rescue its damaged banking sector, has seen bond yields – an indicator of how much Madrid must pay to borrow – shoot up to crisis levels close to 7% in recent days, although they fell slightly, to 6.4%, on Friday.
Mario Monti, the Italian prime minister, warned on Thursday that the continent’s politicians may only have a week to save the euro. He and Spanish leader Mariano Rajoy would like to see an EU-wide deposit insurance scheme to halt bank runs in fragile countries, as well as bond-buying to bring down their interest rates.World leaders meeting at the G20 summit in Los Cabos, Mexico last week, also urged European governments to offer a more convincing response to the crisis, which has sent shockwaves through global financial markets.
