Deliberations continue between Greece and the Brussels
Group to find an honest agreement although this administration continues to
contradict itself. On one occasion it says that it will not pay the IMF on June
2015, and on another, it agrees to pay the IMF. One day they favor rupture and
the other they favor reaching an agreement with Greece’s creditors. In the
beginning there was the issue of referendum now it has subsided.
Even though progress has been made between the
involved parties, and convergence has been observed, the Brussels Group insists
on the zero deficit clause on pensions, reduce supplementary pensions, reduce
primary surpluses to 1% (from 3-4%), disagreed on Greece’s proposal on three
different rates of value added tax (VAT), insists on abolishing the collective bargaining
agreement (although in their countries it exists!), lowest minimum wage, etc..
The IMF and the EU considers that Greece has a high
pension system. To a certain degree this is true. For decades it is true that
Greece (the treasury) financed pension deficits from its annual budgets, but
not by taxes, rather from borrowing.
This administration is a champion in confusing its
audience from the many conflicting and contradictions on major issues. Just the
day before yesterday, the notorious finance minister said on CNN he favored
taxing deposits and imposing capital control, and after he consulted with the
Prime Minister, he took it back. This week the president of the European Commission
said that he is against capital controls and does not believe in its usefulness.
Last weekend, the Interior Minister said he was
against paying the IMF on June 5, and this week, others said that Greece has
the money and will pay, at least the first installment in June. This past
weekend, at a conference of the central committee, the leftist platform of the
ruling party, favors breach of agreement and return to the old currency!
One of the members of the Brussels Group, the IMF,
seems the harder negotiator in the puzzle. It insists on pensions based on
contributions, wants to reduce the minimum pension one receives on retirement,
abolish early retirement. It was confirmed that the Prime Minister called the
US secretary of treasury, to discuss on Greece’s installment payments to the
IMF. Rumors have it that they talked on Greece paying the IMF June payments by
the end of the month, so that an allotted time is available for reaching an
agreement with its creditors.
Meantime the Greek government has stopped payments to
suppliers, and continues to pay salaries and pensions, and the uncertainty
continues to torture the market, unemployment, and money circulation absent.
Meantime, no one knows if Greece will need further financing after the infamous
imminent agreement. This agreement may be worth 5 billion euros in taxes and
other fiscal measures. Projections say that Greece may need 20 – 30 billion
euros in financing after this agreement, and no one knows if it will be
accompanied by another MOU…..
Bill Alexandratos
