Economy: Troika of international lenders returns to Greece


For the first time since October 2011, representatives from the EU commission, the IMF and the ECB – the “troika” of international lenders – will meet in Athens to monitor the progress of Greek efforts to reform.

The long-awaited report by the troika of controlling financial institutions will decide whether or not Greece is allowed to secure further bailout funds. It will also determine whether the terms of the current austerity program may be realigned with the wishes of the coalition government in Athens.

Out of time and money: Dark clouds are gathering over Athens.
Out of time and money: Dark clouds are gathering over Athens

The international group of financial experts has already postponed its mission on numerous occasions, most recently because a large number of members of the new governing coalition under the conservative Antonis Samaras were sick. The troika were reluctant to interfere with the ongoing election campaign in Athens and let it be known that they would not go to Greece until a functional and empowered government was sworn in.

New government, new negotiations?

Now that time has come. But the new Greek government came to power promising to renegotiate the terms of the austerity package and attenuate the social consequences stemming from it. At the very least, the coalition under Samaras expects the reform course to be extended to 2016, so that the country “finally gets a bit of breathing space,” as is often said in Athens. That appears to go without saying for the majority in Greece, where unemployment has hit a record level of 23 percent, and there are signs that a record-breaking recession is setting in.

But the troika can point to the fact that long promised reforms have failed to materialize, above all concerning tax legislation, privatization and the restructuring of the state apparatus. At the time of the last financial check-up in October 2001, the director of the IMF delegation in Athens, Poul Thomsen, already warned that the measures taken thus far would not last much longer.

Unemployed Greeks wait in a long line at a state labor office to collect benefit checks, in Athens, on Monday, Oct. 24, 2011. Waiting times were lengthened by a computer system glitch early Monday. Greece, expecting a fourth year of recession in 2012, is suffering from a rapid rise in unemployment _ now at 16.5 percent _ and drop in living standards.</p><br /><br />
Unemployment has reached the record level of 23 percent

“We need to positively surprise the troika and once again deliver what we promised,” said the economic expert for the conservative New Democracy party, Kostis Hatzidakis, at the time. Hatzidakis is now Minister for Economic Affairs and has the chance to put his economic theories into practice.

Early signs indicate that the governing coalition will begin with privatization in order to restore trust from international lenders. That would mean a worsening of the increasingly bitter conflict with the radical left. Party chief and opposition leader Alexis Tsipras has accused Prime Minister Samaras of already bowing to the demands of the troika, claiming Samaras no longer talks about renegotiating the austerity plan as he did during the election campaign.

No time, no money

But time is running out. According to Greek media reports, the government only has until the end of July or mid-August before the country will actually become insolvent. On top of that, Greece is due to repay over 3 billion euros ($3.8 billion) in state loans to the European Central Bank on August 20, 2012. Further interest repayments of 512 million euros ($6.5 million) are due by the end of August.

Antonis Samaras had promised to renegotiate the terms of the Greek austerity package.
Samaras promised to renegotiate the terms of the austerity package

But there is some good news. According to the latest report by Greece’s international lenders, the inflated Greek state apparatus has shrunk significantly over the past three years. Since 2009, the number of full-time civil servants has been reduced by 11 percent to 780,000, a working paper by the troika stated. However, a reputed counter-report by the IMF’s Bob Traa has caused irritation. There are rumors that Traa claims 70,000 civil servants had been newly employed over the past two years.

The Athens weekly newspaper To Vima reported about the case in detail and added new fuel to the fire on Sunday (July 1, 2012). It is said that the IMF representative in Greece called the relevant newspaper editor to his office, let out his frustration with the mole and threatened the journalist never to speak with the newspaper again. Bob Traa behaved “like a legal inquisitor,” something akin to an Ancient Roman proconsul in Greece, To Vima reported.

Author: Jannis Papadimitriou / hw
Editor: Greg Wiser

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