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Greek vote delivers numbers for austerity: 229 – 64, €86-billion, 200% impost on GDP …

  • July 16th, 2015
  • Posted by EU Australia

Athens hilltop LauraDespite differences and divisions within the ruling Syriza coalition in Athens, and among the creditors, a new financial ‘bail-out’ agreement has passed the Greek parliament, 229 votes to 64.

Deputies from the extremist right-wing Golden Dawn railed against the package, and communists from one wing of the coalition walked out, in sympathy with demonstrators in the square outside.

The rest of the government, together with the main parliamentary opposition parties Pasok and Nea Demokratia, signalled that a highly reluctant and unhappy consensus might be achieved for very tough economic battles ahead.

Athens temple LauraThe reluctance was made plain by the Prime Minister, Alexis Tsipras, 40, who said his government had put up a tough fight, but “the conclusion wasn’t what we wanted.”

On the weekend, a summit of government leaders from the 19 ‘Eurozone’ countries, those using the Euro currency, determined what the terms should be. A proposed special full summit of all 28 EU Heads of Government did not go ahead.

The BBC provided a schedule of the concessions and costs in a new settlement for Greece with the European Union, European Central Bank and International Monetary Fund; trading desperately needed credit access for austerity policies, meant to guarantee money for repayments:

“Greece’s economy has shrunk by 25% in the last five years  … In order to begin negotiations over a third bailout worth €86-billion (A$127.5-billion; xe.com, 16.7.15) over three years, Greek MPs needed to approve measures including:
•    The ratification of the eurozone summit statement *
•    VAT changes including a top rate of 23% to take in processed food and restaurants and; a 13% rate to cover fresh food, energy bills, water and hotel stays; and a 6% rate for medicines and books
•    The abolition of the VAT discount of 30% for Greek islands
•    A corporation tax rise from 26% to 29% for small companies
•    A luxury tax rise on big cars, boats and swimming pools
•    And end to early retirement by 2022 and a retirement age increase to 67”

Torrid events of the last month saw an intense negotiating shuffle between Athens and Brussels; the creditor groups eventually making an enlarged credit offering, but demanding ever-harder undertakings on budget policy in Greece. Then there was the decision by Alexis Tsipras to run a surprise referendum, on whether or not to accept that demand for austerity,  5.7.15. The vote by the Greeks, 61% to 39%, to say no, cut no ice with the Germans, the main creditors, calling the tune in Brussels, and even tougher arrangements were put forward.

Mr Tsipras’s decision to then accept terms, had to be seen as a cave-in or a change of mind by some. It did put off threats to force a sequestering on Greek assets in banks outside the country, in Luxembourg; got the EU to step back from a perversive and extra-humiliating use of inspectors going into government offices in Greece, and saw the continuation of a drip-feed of funds to ensure the liquidity of the Greek banks.

A summary of the day’s decision-making in Athens, from Politico, tallied up the current bills, after the past month, when Greece had to contemplate defaulting on debt and quitting the Eurozone; to go back to a national currency, and take on an even more uncertain future:

“Greece owes the IMF €21.2-billion (A$31.4-billion) for the previous two bailouts. The country missed a payment of €1.5-billion (A$2.2-billion) on June 30 and another bill of about €456-million (A$676.3-million) on July 13. The European Union said Wednesday that it would lend more than €7-billion (A$10.4-billion) to Greece for the country to cover critical repayments in the next weeks … ”

Athens accordion LauraThe IMF provided a rude jolt to expectations, just as the Athens parliamentarians headed toward the climax of their debate, producing an estimate that the new level of indebtedness could be too much to permit recovery, growth and continued repayment. On that count, in a few years the country might owe twice its Gross Domestic Product. It looked like a breach of solidarity on the creditor side, though too late to stop the immediate flow of events.

Among prognostications, chronic dependency could now make Greece a “European protectorate”; a possible code-word for ‘German colony’?

Athens tourists LauraIn the meantime it is Summer, not usually a ‘political’ season; tourists who might begin to balk at extra tax on top of their hotel bills, might anyway keep on coming, if word should spread, that actual collapse, trouble and paralysing conflict have been averted.

Reference

BBC, London, Greece debt crisis: Eurozone deal laws backed by MPs, 15.7.15. http://www.bbc.com/news/world-europe-33535205

*European Council, Brussels, Euro Summit Statement, SN4070/15 1, 12.7.15. http://news.bbc.co.uk/2/shared/bsp/hi/pdfs/13_07_15eurosummit.pdf

Helen Popper, Zeke Turner, Greek parliament passes bailout legislation, Politico, Brussels, 16.7.15. http://www.politico.eu/article/greece-vote-saturday-mp-democracy-blackmail/, (16.7.15).

Pictures Laura Ludwig

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