New Hurdles in Greece’s Bailout Talks Delay Review

Monday, April 3rd, 2017
Last Update: 12:20

A new hurdle in talks for the completion of the second review of Greece’s bailout program appeared, as Berlin seems to find a fiscal gap that would require pension cuts to apply in 2019.

Sources close to negotiations say that European lenders now insist that pension cuts should apply from 2019 onwards. Berlin has found that under the current budget projections, the primary surplus target for 2019 cannot be met. Athens, however, requests the pension cuts to be implemented from 2020 and on.

Another hurdle comes from the International Monetary Fund regarding labor laws. The Fund is against the return of collective bargaining, something on which the Greek side insists on. Also, the IMF requires changes in union laws such as the lockout and higher percentages of mass layoffs.

Finally, another issue that remains open is the liberalization of the energy market. Lenders insist on asking for the sale of individual power production plants of the Public Power Corporation that provide a total of 40 percent of all electrical power in Greece. The aim is to privatize 17 percent of PPC by mid-2018.

The new developments delay the arrival of creditors‘ representatives to Athens. Thereby it is next to impossible for the two sides to reach a staff level agreement before Friday’s meeting of euro zone finance ministers in Malta.

The Greek government now talks of “an organized effort on the lenders’ part and also from the old political system” to derail negotiations. Government spokesperson Dimitris Tzanakopoulos appeared on Skai television on Sunday claiming that Greece’s “old system” has a plan to destabilize the SYRIZA administration, undermines negotiations and takes the creditors’ side.

According to the Greek government, New Democracy, Bank of Greece Governor Yiannis Stournaras, the Democratic Coalition (PASOK-DIMAR) and former prime minister Costas Simitis are the main “players” in the “destabilization plan.”

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