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Athens Macedonian News Agency: News in English, 15-06-30
CONTENTS
[01] Tsakalotos: 'We look forward to greater flexibility in the days
to come'
[02] The door is still open for an agreement, EU Commission spokesman says
[01] Tsakalotos: 'We look forward to greater flexibility in the days
to come'
ANA/MPA---In a statement to the ANA-MPA and other media on Tuesday,
Greece's Alternate Minister for International Economic Relations Euclid
Tsakalotos presented his own version of what caused the breakdown in the
talks between Greece and the lenders. According to the head coordinator
of the Greek negotiating team, at least part of the problem was a lack
of agreement between the three institutions involved, which he said
"did not always see eye to eye". The full statement is given below: Any
breakdown in negotiations is unlikely ever to have one cause. This is
especially true when, as in the case of the Greek government, we were
negotiating with three institutions which did not always see eye to
eye on the desired details of any agreement, let alone over the wider
strategic issues such as the question of whether the Greek debt is
sustainable and needs to be re-profiled. All sides have claimed that
they showed the maximum amount of flexibility in order to ensure an
agreement. Unfortunately this is a claim that is not easily supportable
with respect to the negotiating stance of the institutions. 1)
Fiscal Targets and Fiscal Measures The Greek government agreed to
quite recessionary targets for fiscal surpluses for the coming years,
especially when one considers the income loss (25%) over the last five
years and the huge unemployment rate we face. In this context one would
have expected the institutions to be quite "flexible" – their favourite
word – over how we reach those targets. Not at all: · They insisted
that for 2016, the fiscal package must include 1% of GDP from the VAT. We
were told that increasing the VAT rate on restaurants/catering to 23%
would constitute a "deal maker" – another favourite word. But on the
last day of the negotiations, the institutions changed their stance. Even
though the two sides at the technical level had previously agreed
what such an increase could be expected to raise in tax revenue, they
now said that the sums could only add up if both catering/restaurants
and hotels were increased to the highest VAT rate. Given the effect
of such changes on Greek tourism, it was a little strange to hear the
institutions claiming that it was the Greek government that was proposing
measures that would harm the competitiveness of the Greek economy. ·
They insisted, also that for 2016, the fiscal package must include 1%
GDP from the pension side. The Greek side had proposed a serious reform
proposal on pensions, including cutting early retirement arrangements
and raising the effective retirement age. We also proposed to set up a
serious actuarial study which could have led to proposals for new reforms
to be introduced once the economy turned around, and unemployment began
to fall. But when you insist on 1% GDP from pensions for 2016, you are
insisting on pension cuts not pension reform. · They insisted that
no administrative measures could be included in the fiscal package to
close the fiscal gap. Now it is certainly the case that administrative
measures, such as fighting corruption and tax evasion, take time to bear
fruit. But it is another matter not to allow any revenues whatsoever
from such measures to be included in the proposed fiscal package. And
this is even more extraordinary in the case of this government that ran
the election on an anti-corruption and anti-tax evasion programme. ·
They were reluctant to accept measures that would have been paid by
the elites and the richer sections of society, claiming that this
was anti-developmental. Thus they did not accept the lump-sum levy
on the profits of firms with over 500,ooo profits, while at the same
time they proposed that all businesses, small or large, prepay 100%
of their taxes for the following year. For reasons best known to the
institutions, the latter was presumably deemed developmental. · They
insisted that wage decompression in the public sector, not in itself
necessarily a bad move, should be carried out in both directions. That
is to say that the wages of the poorest public sector workers should
be continued to be cut. 2) Structural Reforms The institutions never
accepted that in the spirit of the February 20 Eurogroup decision,
the Greek government could propose, at least some, reforms based on
a different logic. For they insisted that the privatization list be
extended, and that workers should face real wage cuts as they would be
required to increase their social and health contributions. Moreover:
· They never accepted that the Greek government could, in cooperation
with the ILO, quickly introduce a system of collective bargaining,
something that already exists in most of our partner economies. For
us such a system can contribute to a new productive model in which
firms succeed through innovation and searching for new markets, rather
on the basis of poor wages and poor labour relations. Delaying this
reform merely allows firms to continue sacking workers on, say, 700
euro a month, and replacing them with others on 500 a month. Hardly
an approach to ensure a vibrant new economy. · They never accepted
that the Greek government, this time in cooperation with the OECD,
could set out a new reform agenda for product markets, different from
that of the previous governments. On the contrary they insisted that
liberalizing pharmacies and bakers was somehow crucial to addressing
the competitive deficit of the Greek economy. We, on the other hand,
argued that we should go for the big fish first; that is to say start
with important cartels in certain industries, public procurements, and
anti-corruption measures. We further argued that the correct sequencing
of supply side reforms was crucial to their success, and that the OECD
agreed with us that, in the past, a failure of sequencing was in part
responsible for the failings of the structural adjustment policies in
Greece. 3) Financing The financing of any extension of the programme
was planned to continue on the old model: reform-disbursement-payment,
with multiple reviews one after another. These financing arrangements
would have relied on IMF disbursements, which could not be taken for
granted. Moreover they would have not addressed the issue of arrears,
delayed payments to our own citizens, and would have provided precious
few buffers for unforeseen events. The above would hardly have provided
the fiscal space for the government to have been able to concentrate
its attention on its ambitious reform agenda. Moreover with respect to
problem of the debt, we were offered a slightly improved version of the
November 2012 promise of the Eurogroup to reconsider the issue of debt
after the summer. The modest proposal to shift bumpy ECB debt into less
bumpy, and longer term, ESM debt, without providing any more money for
the Greek government itself, was never seriously considered. Conclusion
It is difficult to believe that the proposal of the institutions would
have put aside, once and for all, the question of Grexit. It would have
merely pushed it back till the moment that a new programme, and the
debt, were negotiated. In this context it is difficult to believe that
the pent up demand in Greece would have been released: that consumers
would have increased their consumption; that citizens would have returned
their money, from abroad or from under the mattress, back to the Greek
banks; that investors would have invested. It is difficult to believe,
in other words, that the economy would have turned around, that we
would have been able to keep our promises on fiscal surpluses. So what
does the Greek government think of the proposed flexibility of the
Institutions? It would be a great idea. We see the referendum as part
of the negotiation process, not in lieu of it. So we look forward to
greater flexibility in the days to come.
[02] The door is still open for an agreement, EU Commission spokesman says
ANA/MPA---European Commission spokesman Margaritis Schinas on Tuesday,
referring to the negotiations with Greece, reiterated European Commission
president Jean-Claude Juncker's statement that the door is still open
to reach an agreement, but time is running out.
He also said that Monday evening the Greek Prime Minister spoke on
the phone with Juncker. He added that the contacts between Athens and
Brussels continue on Tuesday.
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