[Marxism] Fresh Greek Bailout Proposals Fall Short of Creditors’ Demands

Louis Proyect lnp3 at panix.com
Wed Jul 1 06:24:21 MDT 2015

WSJ, July 1 2015
Fresh Greek Bailout Proposals Fall Short of Creditors’ Demands
Athens sends new proposal for budget cuts and policy overhauls as part 
of request for new bailout
Greece became the first developed country to default on the 
International Monetary Fund after it missed a $1.73 billion rescue 
program payment. Charles Forelle reports from Athens.


A new proposal for budget cuts and policy overhauls from Greek Prime 
Minister Alexis Tsipras was dismissed by European officials Wednesday as 
insufficient to revive negotiations over a new bailout for Athens.

Officials said the proposal, received Tuesday night by the 
representatives of Greece’s official lenders, appears to fall short of 
creditor demands. Greece defaulted on a €1.55-billion ($1.72-billion) 
repayment to the International Monetary Fund on Tuesday.

German Chancellor Angela Merkel reacted coldly to the proposal, 
emphasizing that Berlin would maintain its tough stance and was prepared 
for a fight.

“A compromise at any cost would only be a result in order to get a 
result, only because one isn’t able to live with a conflict because one 
is afraid to fight the battle,” Ms. Merkel said. “There can’t be any 
doubt: If Europe lost its ability to find a compromise in which 
advantages outweigh disadvantages, then Europe would be lost.”

According to people familiar with the thinking in Berlin, this week’s 
turmoil, including the closure of Greek banks, the expiration of the 
bailout program, and the decision to call a referendum, have changed the 
circumstances too much, and bailout talks can no longer simply be 
resumed from where they were when they broke down last Friday.

Ms. Merkel and other senior officials have said that Germany would 
discuss a new bailout request only after the referendum had taken place 
or if Greece called it off.

German Finance Minister Wolfgang Schäuble said that Greece’s left-wing 
government had to provide more clarity on its demands before 
negotiations about further financial aid could resume. The letter sent 
Tuesday hadn’t done that, he said.

“This is no basis for serious” negotiations, said Mr. Schäuble during a 
news conference on the government’s 2016 budget. “First of all, Greece 
has to declare what it wants.”

The Greek premier’s proposals was contained in a two-page long letter 
dated June 30 to the heads of the three institutions that oversee the 
bailout—European Commission President Jean-Claude Juncker, European 
Central Bank chief Mario Draghi and IMF Managing Director, Christine 

In the letter seen by The Wall Street Journal, Mr. Tsipras offered to 
accept a draft proposal disclosed on the commission’s website this 
weekend with a handful of changes. The commission said the proposal was 
never presented to the Greeks because Mr. Tsipras’s referendum call had 
effectively aborted the negotiations.

Mr. Tsipras says Athens will accept the reforms of Greece’s sales tax 
with the exception of a special 30% discount for Greek islands, many of 
which are in remote and difficult-to-supply regions, which he insisted 
be maintained.

Greece's Prime Minister Alexis Tsipras prepares for a TV interview at 
the State Television in Athens on Monday. ENLARGE
Greece's Prime Minister Alexis Tsipras prepares for a TV interview at 
the State Television in Athens on Monday. PHOTO: THANASSIS 
In the letter, whose existence was first reported by the Financial 
Times, Mr. Tsipras also requests a move of the retirement age to 67 by 
2022 to begin in October, rather than immediately, and that a 
supplementary payment to the poorest pensioners be phased out more slowly.

European official said the proposal didn’t match what creditors were 
seeking. “He repeated the same-old known issues,” an EU official said. 
It’s “too little, too late.”

Another official described the proposals from Mr. Tsipras as a weakening 
of the measures that have been discussed between negotiators from both 
sides and wouldn't be well received by the creditors.

A senior Greek government official said that the Greek government wasn't 
planning to send additional proposals with more concessions Wednesday. 
Mr. Tsipras is expected to make a statement on public television later 
in the day.

Eurozone finance ministers were to discuss the new Greek requests in a 
conference call in the late afternoon.

The EU’s vice president for the euro, Valdis Dombrovskis, said a deal on 
a new bailout is possible before big new debt repayments are due, but 
stressed it would take some time. The next big payment is July 20, when 
€3.5 billion in Greek government bond held by the European Central Bank 
come due.

He stressed that capital controls and the uncertainty created by the 
expiration of the old rescue deal will make it harder for Athens to get 
its economy growing again. “Now much more damage is done and much more 
effort will be needed to restore the situation,” Mr. Dombrovskis said.

He also said that the commission and other institutions involved in 
eurozone bailouts can’t start negotiations on the terms, size and 
duration of a new aid deal before a decision from eurozone finance 
ministers to allow such talks. Some ministers, including Mr. Schäuble, 
need a positive vote in their parliaments before they can even agree to 
start talks on a new bailout.

Late Tuesday, Greek officials were also raising doubts over their plans 
for the referendum, in which the government had asked its citizens to 
vote against pension cuts and sales-tax increases. But a second senior 
Greek officials said it would move ahead.

“The negotiations will continue next week after the Greek people’s 
decision,” the official said.

Most Greeks plan to reject the creditors bailout terms though support 
for Greece to stick to austerity and secure its place in the eurozone is 
growing, a poll showed Wednesday.

In the first poll figures published since Mr. Tsipras shocked Europe by 
calling a vote on Sunday, 46% said they back the “no” vote. But support 
for the “no” vote had been much higher, at 57%, before Greek authorities 
imposed capital controls and closed banks.

The data, put together by pollster ProRata and published in the daily 
newspaper Efimerida ton Syntakton, showed that 37% of respondents backed 
“yes” vote. Support for the yes vote was just 30% before the decision to 
shut banks this week.

—Andrea Thomas in Berlin contributed to this article.

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