The ongoing negotiation between the government and the troika over the final review of the Greek bailout programme is developing into a political and economic thriller as the government enters its most crucial week since June 2012, when Antonis Samaras became Prime Minister.
Everything is hanging from a thread while Athens awaits the troika’s response to the new proposals sent by the government in the early hours of Sunday morning.
If the impasse remains, the political developments may prove to be swift and unpredictable.
Despite the heavy cloud hanging over the government and the ‘intense pressure’ being exerted personally on the Prime Minister, as he has described it in private talks, within the government there remains an atmosphere of cautious optimism. Antonis Samaras spent much of the weekend in telephone discussions with the Deputy Prime Minister Evangelos Venizelos, who was in Turkey, over the details of the government’s proposals to the troika.
The government has proposed a number of ways to bridge the gap between it and the troika over the projected fiscal gap for 2015. The troika is demanding that the Greek government acknowledge that an additional 2.5 billion euros in additional austerity measures are required for Greece to achieve the Memorandum target of a primary surplus of 3% of GDP in 2015.
Following the government’s submission of the new proposals to the country’s lenders, officials expressed optimism that the chasm between the two sides would ultimately be bridged.
The leaders of the New Democracy and PASOK coalition government still hold out the hope that the troika will return to Athens soon – potentially as early as tomorrow, despite the negative turn that the negotiations have taken - particularly due to the unyielding stance taken by the IMF which is refusing to budge on a number of issues.
According to the government, should the troika still remain unconvinced, the two sides will continue the negotiations via email in the hopes that at least a preliminary agreement is reached by Friday.
Essentially Samaras and Venizelos are hoping that some agreement can be reached before the next Eurogroup meeting of the eurozone’s finance ministers on Monday, December 8th.
On the day immediately preceding the Eurogroup meeting, parliament is due to vote on the 2015 government budget. In the event that the troika and the government reach an agreement on the new austerity measures to be implemented, these will not be included in the budget but in other legislation – potentially in a planned bill regarding the new round of European structural funds which is due to be voted on in the coming days. There is also a small possibility that the measures will be included in an executive decree to avoid a potentially hazardous vote in parliament.
Despite the different scenarios that are currently swirling, the Prime Minister is reportedly sticking by his road map to stay in power which is to see ‘completion of the troika review, the commencement of a discussion over restructuring Greek debt, constitutional reform and the election of a new President of the Republic as scheduled.”
TheTOC has learnt that in recent discussions the Prime Minister had with various officials, Samaras made clear that he has no intention whatsoever to seek the election of a new head of state ahead of schedule. He also does not intend to put forward the names of a potential nominees anytime soon.
Samaras and Venizelos are investing much in Greece’s geopolitical trump card to prompt the IMF to reconsider its position. Central government officials, speaking in private, indicate that the key to unlocking the impasse with the IMF lies in next Saturday’s meeting in Athens between the Turkish Prime Minister, Ahmet Davutoglou and Samaras and Venizelos during which key energy issues will be discussed.
Another key to achieving an agreement is the change in the stance of the government, which now accepts that for at least a year it will accept a precautionary credit line from the Europe (the so called Enhanced Conditions Credit Line – ECCL) with continued involvement of the IMF as well, which will continue to fund the government with bailout loans through 2015 (as originally planned). Effectively this amounts to a climb-down on the part of the government which stated several weeks ago that it would seek an early departure of the IMF from the country.
Given the above, the message from the prime ministerial mansion is that an agreement will be reached without the need for further pension cuts and tax hikes. This in turn will bolster the government’s credibility among legislators and open the way for a new president to be elected (for which a super majority of 180 MPs is required or snap elections will be triggered). However, even if this is not achieved, government sources believe that having reached an agreement with the troika that can still be portrayed as 'ending the memorandum' the governing parties will be better placed to face the electorate in a general election.
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