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Debt relief for Greece comes closer

In their last meeting on Monday May 9, Eurozone finance ministers (the Eurogroup) talked about releasing the next tranche of Greece's current € 68 billion bailout package

By: N. Peter Kramer - Posted: Wednesday, May 11, 2016

The Greek government and the International Monetary Fund (IMF) are still at odds over ”contingency” austerity measures worth €3.6 billion in the event that Athens misses its budget target for a 3.5% surplus in 2018.
The Greek government and the International Monetary Fund (IMF) are still at odds over ”contingency” austerity measures worth €3.6 billion in the event that Athens misses its budget target for a 3.5% surplus in 2018.

by N. Peter Kramer
 
They made more progress than expected and will meet again on May 24 to take a decision. The positive attitude was probably facilitated by the Greek Parliament's vote on Sunday night for additional pension and tax reforms. Some reporters heard German Finance Minister Schauble saying that he was 'confident that a solution can be found' this month. 
 
Surprisingly, debt relief for Greece was also on the agenda. Until now this has been a 'forbidden' subject for the Eurogroup in spite of the requests by Greek PM Tsipras and the pressure by Christine Lagarde, managing-director of the IMF, one of the Greek debtors. Eurogroup Chair Jeroen Dijsselbloem said that a straight haircut can't happen but 'any measures will be conditional upon full completion, full implementation of the measures agreed'.  To be continued on May 24.
 
The Greek government and the International Monetary Fund (IMF) are still at odds over "contingency" austerity measures worth €3.6 billion in the event that Athens misses its budget target for a 3.5% surplus in 2018. The Tsipras government says it is ready to establish an automatic correction mechanism, but vows not to legislate specific measures as such a move would go against the country's constitution. When the Eurogroup will consider debt-relief, it could soften Lagarde's stance on the contingency austerity measures.  
 
France, Italy, and Portugal, all led by center-left governments, along with the European Commission, support Greece on this issue. "In our view, we do not need a precise and detailed package, but a mechanism that shows exactly how to take such measures if necessary," Economic Affairs Commissioner Pierre Moscovici recently said.
 
Gianni Pittella, the leader of the S&D group in the EP, was also supportive, saying that the IMF and the "German hawks Schäuble-style […] try to use inappropriate weapons to destroy a democratically elected government and a nation that is making big efforts." Pittella also stressed that Tsipras represents a progressive force, and admitted that there was a dialogue with him, but that no request on the part of the Greek premier to join the Party of European Socialists has been made.
 
Despite strong socialist support for the Tsipras government in the EU, the two affiliated Greek S&D parties, particularly Pasok, have departed from the socialist party line. Pasok blames Tsipras for the current deadlock and is demanding his resignation. The other Greek member of the S&D group is Potami. Its leader, Theodorakis, recently said that current negotiations are not in favor of the country but just 'another show of the government'.
 
It seems that Pasok is quite isolated in the S&D group.  Certainly not everyone has forgotten that Pasok governments of the past are the 'co-authors' of the gigantic problems of today. 

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