EUROPE

Greece delays delivery of spending-cuts plan to creditors

and
Greek officials to miss midnight deadline for list of reforms needed to win a bailout extension

Caught between their election promises and the reality of bills to pay, Greece’s new leftist leaders Monday delayed delivery of a detailed plan to creditors for boosting employment at the same time they make deep spending cuts.

Prime Minister Alexis Tsipras and his populist Syriza party sailed to victory last month on vows to end the indignity of austerity measures imposed by European lenders in exchange for $280 billion in bailout funds over the last five years.

But Tsipras’ campaign-trail message, that Greeks can demand easier terms on repayment without giving up their membership in the common currency alliance, has come back to haunt him as his freshman government tries to persuade the troika of financial institutions that oversees the bailout agreement to extend it before its Saturday expiration.

European Union leaders want to preserve the 19-nation Eurozone, as a Greek departure would represent a failure of the euro experiment that is a fundamental part of the European Union vision of the continent as a collective economic powerhouse. Syriza politicians felt confident that the Eurozone needed Greece at least as much as Greece needed the euro when they ran on a platform vowing to recover sovereignty over the country’s finances.

Tsipras had counted on other heavily indebted Southern European countries joining in its ultimatum for austerity relief. He was forced to make concessions to the bailout oversight troika when that debtor-nation uprising failed to come together.

His rollbacks from threats to default if the loan terms weren’t eased included a pledge to refrain from any unilateral spending that would compromise Greeks’ ability to meet their bailout obligations. That has outraged leading Syriza figures who accuse Tsipras and Finance Minister Yanis Varoufakis of reneging on the party’s pledge to voters to invest in jobs in a country with 26% unemployment.

Varoufakis assured his Eurozone colleagues Friday that Athens was prepared to make the necessary budget cuts and reforms to qualify for extension of the bailout deal for four months.

A list of belt-tightening measures and structural reforms was due to be presented Monday to the European Commission, the European Central Bank and the International Monetary Fund — a deadline Athens authorities announced they wouldn’t meet until Tuesday morning. Officials said they would email the proposals to the bailout monitors in time for a European finance ministers’ teleconference to review the list.

The plan reportedly involves further streamlining of the civil service and greater efforts to collect taxes, including those lost to smugglers on sales of fuel and tobacco. One official close to the talks told The Times that the list would also feature plans for privatizations, a shift from policies Syriza advocated on the campaign trail.

Failure to win international approval of the plan would revive fears of a Greek default and the country's potential exit from the Eurozone, prospects that panicked global markets last week before Tsipras toned down his government’s claim to be ready to go it alone.

Locked out of international markets by its huge debt and dim growth prospects, Greece has been reliant on the bailout monitors for loans since the economy imploded in 2009.

Details of the proposed reforms remain unclear, and Eurozone officials have complained that drafts presented by Varoufakis in meetings last week were vague and lacked estimates of how the measures would affect solvency.

Though Friday’s provisional agreement allows Greece to amend its obligations, it doesn’t reduce them. That situation has sparked fierce dissent from some of the prime minister's closest party cadres.

On Monday, Yiorgos Katrougalos, the new minister of administrative reform, said he would resign if the government retreated from its negotiating “red lines.”

Syriza’s most revered member, Manolis Glezos, accused the government of deceiving voters. In a note posted on his blog, the 92-year-old political veteran, who gained fame as a resistance fighter in World War II and once scaled the Acropolis to rip down a Nazi flag during Athens’ occupation, apologized to the Greek people “for participating in this illusion.”

By failing to throw out the existing bailout deal, Glezos said, the government was “renaming fish and meat.”

Despite the concerns, senior government officials insisted that Athens is “near certain” its list of reform measures will win the troika’s approval.

“Throughout this procedure we have had an open line of communications with Brussels,” a senior Finance Ministry official said. “A negative review of the measures would come as a surprise.”

Special correspondent Carassava reported from Athens and Times staff writer Williams from Los Angeles.

 

 

Copyright © 2016, Los Angeles Times

UPDATE

5:45 p.m.: This article has been updated with additional background.

10:35 a.m.: This article has been updated with Greek officials saying they will miss the deadline and file their proposals Tuesday morning.

This article was originally posted at 6:02 a.m.

71°