Commentary
Athens doesn’t need more sacrifices, it needs to grow
The Eurogroup is asking Greek Parliament to pass a series of ‘safeguard clauses’ before releasing more cash to Athens. When will Europe allow Greece to grow its economy?
Europe continues to demand sacrifices from Greece, and the Syriza government continues trying to protect the most vulnerable social classes. These, in essence, were the opposing messages this week from Eurogroup and the government of Alexis Tsipras.
To close the evaluation phase on Athens’ progress, the European Union finance ministers asked Prime Minister Tsipras to approve extraordinary measures that look very much like those that in Italy are known as safeguard clauses: measures taken only if fiscal targets, particularly with regard to revenue, are not met.
In the coming days, these terms should be defined in detail, in collaboration with Finance Minister Euclid Tsakalotos. By Thursday, Eurogroup wants to close this delicate phase. The problem, of course, is there for all to see. The group’s insistence on austerity will slow the recovery, and the Greeks, stuck in a perpetual depression, won’t be able to hit their fiscal targets.
Eurogroup President Jeroen Dijsselbloem said that in recent days there have been important advances in the negotiations with Greece, insisting, however, on the importance of the Greek Parliament approving the safeguard clauses.
Now the Greek leftist government is faced with yet another difficult challenge: On the one hand, it must prevent the country from running out of cash, but it must not allow a neoliberal financial environment to economically strangle Greece. They must also reaffirm that the policy priority must be protecting the weaker social classes, which have been bled during five years of reckless austerity.
There are also difficulties from a practical point of view. In a press conference, Tsakalotos observed that Greek law does not allow parliament to vote on provisional measures that would only be applied in certain conditions. “It’s not just Greek law,” he added. “I was speaking to [French Finance Minister] Michel Sapin earlier; it’s in French law as well. You cannot say, ‘I will vote for this if this happens when it happens.’ You just cannot do that in legal form.”
However, Tsakalotos stressed that Athens is working with creditors to try to find a solution that meets their demands, but also the Greek demands. For now, the lending institutions want these extraordinary measures to be adopted and implemented in the future in exchange for €3.6 billion, a figure that corresponds to 2 percent of Greek GDP.
One of the main problems is a fundamental disagreement about the effectiveness of measures agreed to in July as part of the deal to keep Greece in the eurozone. The Tsipras government and the E.U. believe the terms will allow the country to reach, by 2018, a primary surplus of 3.5 percent of GDP. The International Monetary Fund, however, does not expect the surplus to grow beyond 1.5 percent and calls for new interventions.
But their pessimism is not supported by the latest data: As reported this week by Eurostat, Greece registered a primary surplus of 0.7 percent in 2015, even as the IMF keeps talking about a deficit.
Athens is pushing to close this chapter and move on to discussing ways to reduce public debt. The Eurogroup on Thursday gave the job to Dijsselbloem to plan the next steps. Most European countries favor lengthening payment terms, instead of discharging debt.
Tsipras and Tsakalotos, however, want to send a clear signal that the country is not at risk of failure, trying to permanently ward of speculators and vultures. That can only happen, provided that both the IMF and Berlin realize that the season of austerity is over, and that without bold moves it will be impossible to escape the quagmire.
Originally published at http://ilmanifesto.info/lue-chiede-ad-atene-altri-sacrifici/ on 2016-04-23