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Greece: Government Must Argue With The “Troika” …

  • July 7th, 2012
  • Posted by EUEditor

eu-flagg-eu.jpg greek-flag-7-12.jpgGreece’s new coalition government has begun a month of talks with a group called the Troika, seeking to tailor a fresh set of recovery schemes.

Report by Danika Ferguson

FACING OFF WITH THE TROIKA

The three large organisations that together hold the most power over Greece’s financial future form the Troika: the  European Commission, the European Central Bank and the International Monetary Fund.

They are responsible together for monitoring Greece’s compliance with the rules that were agreed to, when they advanced guarantees, to enable the country to keep paying out its national debt.

Those rules entail strict spending guidelines, and a demand for revenue to be achieved, putting emphasis on austerity to try and remedy a drawn out and deep recession.

TOXIC MEDICINE

The new government, elected in June, says the medicine has been toxic, leading to a financial dead end, and it is asking for a clear change.

More time to get a full debt repayments system would be a start – with a bonus lead-up period of one to two years.

The government would also like recognition of plans that it has, for privatisation of large assets, like Pireaus port; for a well-organised, low tax regime, to take over from a system of taxes that a majority seems able to dodge very well; for a drive against persistent official corruption; and a drive for more foreign investment in very competitive national industries like tourism and shipping.

DRAWING THE LINE

A senior government MP, Yiannis Plakiotakis, this week said a clear line had to be drawn between actions of the IMF in past economic crises in Argentina or the Ukraine, and the case of Greece – which should not require the same level of tight supervision.

The IMF itself disagreed, saying it was not actually negotiating with Greece, just taking stock of how it was going with the required changes, like cutting back the payroll for the public service.

Said Mr Plakiotakis, the government definitely would not be imposing any more salary cuts on public servants, or authorising the same for private sector workers, nor would it do any further cuts in pensions – which had followed on from the Troika prescription.

“The formula was wrong. It was wrong because from one hand they were cutting wages and pensions and on the other hand they were increasing tax.

“This of course had a negative effect in terms of the public incomes on one hand and on the other hand we lost thousands of jobs,” he said.

“That’s why we need investment, that’s why we need to negotiate all these terms in order to change certain formula which didn’t work in Greece.

“If for example, the foreign investors or the future investors knows that there will be a flat tax for the next 10 or 15 years in Greece this of course sends a stable message, a fixed message, that Greece wants to host investments.

“This is a clear message but this of course needs to be negotiated with the Troika.”

FIVE YEARS RECESSION

Greece has entered its fifth year in recession, and it remains bogged in government debt that accumulated over some decades, then came to a head after the Euro was introduced; and with the Euro, cheap credit — for a while.

“Greece has the capability to overcome all these difficulties… and it has the brains as well. We are optimistic for certain reasons.

“This is a national goal and of course there are aspects of our economy which we can take advantage of,” Mr Plakiotakis said.

Talking with the officials from Brussels, Frankfurt and the IMF, if not actual negotiations, is expected to continue throughout July.

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