Picture: To Vima
Time has come for real changes in Greece and there is no turning back. These are the conclusions that can be drawn after the first meeting of the supervisory Troika leaders from the International Monetary Fund, the European Central Bank and the European Commission with Finance Minister Yiannis Stournaras. He presented to the supervisors the general framework of the first draft plan for budget cuts worth 11.5 billion euro.
A number of Greek media highlight the fact that the Troika has not requested additional measures for financial cuts, but that does not mean that the following months will be easier for the Greeks. The currently agreed programme of financial assistance includes reductions in state employees' salaries, pensions, health costs and social benefits. The possibility of direct lay-offs of civil servants remains open as well as that of the permanent closure of state organizations and enterprises - a theme that has been tendentiously evaded because it has been a particular one for Greek politicians in the three years of deepening economic crisis.
"Today we discussed a number of topics related to the reform for 2012 and the 11.5 billion euro. We talked about the processes associated with structural reforms, developments in the banking system and the ways to cover the state's financial needs, because we have not yet received some of the tranches by the loan. We discussed all important issues, but actually none of the topics was completed. There is goodwill on both sides to find the best possible solutions", said after the meeting a senior official from the Financial Ministry.
Stournaras will fight on two fronts. One is at the negotiating table with institutional lenders in Greece, and the other with the subversive flows in political government. Although Greece has a three-party coalition government, composed of New Democracy, PASOK and Democratic Left, it is not homogeneous in its views about the road to financial recovery.
After the Finance Minister held a meeting with the supervisory Troika leaders, the list of cuts in the budget was presented to the leaders of the three governing parties. It includes a ceiling on pensions to two thousand euros and a reduction on a scale for pensions below that level. A backdated reduction of civil servants wages through changes in the scale of salaries and a 10% cut of the salaries of the military and the police. By the end of the year the removal of a series of social benefits and allowances will follow, and retirees who are insured in social funds with deep deficits will suffer a 25% -30% decrease in the one-off payment at retirement. Updates to salaries for length of service and contribution to work will be frozen, and the salaries of managerial staff in the state administration will also be reduced. Not least important is the decision that the state will not pay university fees of "incessant" students any more, and health costs of the insured, covered by the state, will not exceed 1,500 euro per year.
Meanwhile, Citigroup said that the chances of Greece leaving the eurozone in the next six months have jumped again to 90%. Our main scenario assumes that we will see a spread of the financial difficulties in the countries of the European periphery, which will lead to a recession this year and the next, said analysts from the bank institution. To prevent this undesirable outcome, Brussels has harnessed all possible means to activate the decisive reforms in Greece. The President of the European Commission travelled specially to Athens on Thursday to meet in the late afternoon with Prime Minister Antonis Samaras and to have first-hand information about the plans of the tripartite government.
The Prime Minister assured the European leader that the government is determined to carry out all the reforms agreed under the Memorandum for financial aid, but insisted on the limitation of other European leaders' statements, which interfere with the implementation of the programme. Samaras drew particular attention to the necessity for European institutions to take additional measures to limit the problems of illegal immigration and ensured that Greece will meet correctly its obligations to institutional lenders.
Barroso, in turn, said that he has full confidence in the Greek government and stressed that the time for actions has come. Europeans refuse to accept empty promises. He insisted that the government should accelerate the privatization processes, the reforms in public administration and to take serious actions against tax offences. "The key word is: deliver, deliver, deliver", was adamant the European Commission President, adding: "The main issue is implementation (of the measures) to deliver results". The message of the European partners is that delays in implementation must come to an end. "Words are not enough. Actions are much more important". Jose Manuel Barroso also addressed eurosceptics in Greece who believe the country will do better outside the euro. He explained that the reforms and recovery in the European community will be much more effective than the changes that will result from a possible GREXIT. "All of us in the Euro area and in the European Union should join hands and work together in Greece and in the other countries for the future of our common currency, for the future of our European project. Sometimes I fear that some people have not yet understood that we are all in the same boat. We are really all in the same boat in Europe. That is why together Greeks and all the other Europeans should show the same resolve for the very important commitments that have been undertaken."