Leaked: Creditors’ bailout plan for Greece sent to eurogroup

25-06-2015

Eurozone finance ministers have begun to gather for their fourth meeting in a week, attempting yet again to strike a deal on a package of Greek economic reforms to release a desperately-needed €7.2bn in bailout funds to Athens.

The ministers have been sent what one official termed a “feasibility blueprint” – but the Financial Times has obtained a copy and it looks very much like the version creditors annotated and sent back to Athens on Tuesday. We’ve posted a copy of the document here.

The first place to look is page three of the nine-page document, where the section on pension reforms begins. This has become the major sticking point between the two sides and, while it makes some concessions to the Greek government, it is very much in keeping with creditor demands that early retirement schemes be curtailed and the effective retirement age be raised very quickly.

Under the plan sent to finance ministers, Athens would ensure the retirement age is moved to 67 by 2022, significantly faster that Alexis Tsipras, the Greek prime minister, had sought. Originally, Athens was pushing for 2036, but Mr Tsipras’ compromise plan submitted on Monday moved that to 2025.

There is an important creditor concession in the pension reforms, too, though. Creditors have been trying to get rid of a “solidarity grant” programme that provides a top-up bonus to poorer pensioners, know by the Greek acronym EKAS, by 2017 at the latest. Athens had offered 2020. The new plan splits the difference and goes with December 2019.

The EKAS phase-out will start immediately, however, with the wealthiest 20 per cent of the recipients losing the benefit as soon as legislation is passed.

There are some other elements of the Greek plan that survived as well, including raising contributions pensioners must make towards healthcare form 4 per cent to 6 per cent.

The other major sticking point between the two sides has been an overhaul of Greece’s value-added tax scheme. Here, too, the plan makes some compromises to the Greek plan. Creditors had originally sought a simplified two-tier system with most goods taxed at the top 23 per cent rate. Creditors have now gone along with a Greek idea of a three-tier system, including a “super-reduced” rate of 6 per cent for pharmaceuticals, books and the theatre.

Importantly, the creditors have conceded on keeping electricity in a middle 13 per cent VAT rate, something Athens has long demanded. “Basic food” also goes into the middle rate, but it appears all other kinds of foods – including restaurants and processed foods – goes at the higher 23 per cent rate. Athens has attempted to keep process foods at the reduced middle rate.

Another blow to Athens: the creditors plan would strip out VAT exemptions for Greek islands. This is particularly sensitive for Mr Tsipras’s coalition partner, the Independent Greeks, who have argued it was unfair for some of Greece’s most remote islands to pay the same kind of taxes that mainlanders do.

On other tax matters, creditors keep Athens’ idea of raising corporate taxes from its current 26 per cent rate, but rather than moving it to 29 per cent as Mr Tsipras suggested, it would be 28 per cent under the creditors’ plan. Gone is the Greek idea of a one-time 12 per cent tax on all corporate profits over €500,000. But the plan keeps Mr Tsipras’s plan to raise luxury tax on yachts from 10 per cent to 13 per cent.

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The experience of Greece demonstrates the importance of building a pan European movement based on values of solidarity and deep democracy. Thank you for doing so much to organise this .
Hilary Wainwright| Red Pepper magazine |

"This is sheer unbridled sadism. The Greek people are being punished for the failure of the neo-liberal consensus to avert the hideous and increasing forms of inequality which were always inscribed within its mandate. Nothing can explain why the most powerful countries of Europe should want to continue to impose on Greece policies which have brought it to the brink of collapse, other than the desire to precipitate a true collapse which they will then take as the proof that only their vicious system could have saved it - a self-defeating argument and a blatant lie. We can only speculate what unconscious links there must be between the forgiving of Germany's post-war debt, of which it remains the beneficiary to this day and without which it would not be in a position to dictate its terms, and its refusal to countenance any such forgiveness, let alone the paying of war reparations, to Greece. No logic can explain it. We have entered the realm of the cruellest social fantasy. The irony is that the whole of Europe will now suffer. But our hearts go out to the Greek people who will suffer - who are already suffering - most."

Jacqueline Rose, Birkbeck Institute for the Humanities.

Étienne Balibar :"The struggle of the Greek people is the struggle of all European democrats, of all those who believe in human progress . In the case of a potential defeat all European peoples would pay the price. In the case of a potential victory, as limited as it may be, all European peoples would benefit. That's why it is necessary for those French and European forces who have hope in the renewal of democracy to positively answer the calls of Syriza to build European solidarity around Greece and the Greek people. The perspective of a referendum urgently requires the reinforcement of this solidarity"

Slavoj Zizek: "The struggle that goes on is the struggle for theEuropean economic and political Leitkultur.The EU powers stand for the technocratic status quo which is keeping Europe ininertia for decades. In his NotesTowards a Definition of Culture, the great conservative T.S.Eliot remarkedthat there are moments when the only choice is the one between heresy andnon-belief, i.e., when the only way to keep a religion alive is to perform asectarian split from its main corpse. This is our position today with regard toEurope: only a new "heresy" (represented at this moment by Syriza) can savewhat is worth saving in European legacy: democracy, trust in people,egalitarian solidarity. The Europe that will win if Syriza is outmaneuvered isa "Europe with Asian values" (which, of course, has nothing to do with Asia,but all with the clear and present tendency of contemporary capitalism to suspenddemocracy). We from Western Europe like to look upon Greece as if we aredetached observers who follow with compassion and sympathy the plight of theimpoverished nation. Such a comfortable standpoint relies on a fateful illusion- what goes on in Greece these last weeks concerns all of us, it is the futureof Europe which is at stake. So when we read about Greece these days, we shouldalways bear in mind that, as the old saying goes, de te fabula narrator."

 "The behavior of the Troika today is a disgrace. One can scarcely doubt that their goal is to make it clear that defiance to the northern banks and the Brussels bureaucracy will not be tolerated, and that thoughts of democracy and popular will must be abandoned. Other than power, there is no reason to continue with the shameful farce in which French and German banks profit from the suffering of the people of Greece."The debt should have been radically restructured long ago, or simply declared “odious” and cancelled. Today, Greeks are offered a miserable choice between two painful alternatives. One can only hope that their brave resistance to the brutal assault will encourage global solidarity that will save them and others from the harsh fate dictated by the masters."

Noam CHOMSKY | United States | MIT


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