By G. Kampourakis
[email protected]
A controversial Cabinet reshuffle this week by Greek Prime Minister Alexis Tsipras offered only a brief distraction for his poll-trailing leftist-rightist coalition, as it faces a scheduled reduction in social security expenditures - as of Jan. 1, 2019 - which will slice monthly benefits for roughly 30 percent of all pensioners in the country.
The scheduled austerity measure was chosen by the current government itself as one of the ways to achieve annual fiscal targets agreed to with institutional creditors. Those fiscal targets are clearly stipulated in the recently concluded third bailout for the country. The third and last memorandum officially expired on Aug. 20, 2018, however, Greece's obligations to institutional creditors, primarily Eurozone institutions up until 2023, are both well-defined and ambitious.
Facing general elections in 2019 and with the ruling SYRIZA party trailing main opposition New Democracy (ND) party by double digit percentage points in practically all mainstream opinion polls for nearly a year and a half, the prospect of implementing another round of pension cuts is viewed as politically "suicidal" to the Tsipras government coalition. The latter includes the small right-wing Independent Greeks (AN.EL) party, as the junior coalition partner, which itself appears in polls as struggling to again make it into Parliament.
Government sources who insisted on remaining anonymous said the coalition's goal is to suspend, rather than postpone, the measure. The same "unofficial spin" emanating from the Maximos Mansion government house is that an agreement to achieve creditors' acquiescence to scrap the austerity measure is near, and that no "unilateral action" by Athens will be necessary.
The coalition government's position, albeit still "unofficially uttered", is that the IMF has no say in Greece's post-memorandum period, whereas European partners back Athens.
While top EU Commission officials, most notably EU Commissioner for economic and financial affairs Pierre Moscovici, have favored "softer" fiscal discipline for Greece, assuming it meets annual targets (i.e. primary budget surpluses as a percentage of GDP), the official positions of the European Central Bank (ECB) and European Stability Mechanism (ESM) regarding the specific austerity measure remain to be seen.
Although considered more of a restructuring measure rather than a fiscal decision, the Tsipras government has insisted over the past few months that if it achieves annual fiscal targets, and maintains previously implemented social security reforms, then the looming pension cuts are unnecessary.
The first clear indication of where the "scales will tip" comes on Friday during a EuroWorking Group meeting, while the first substantive discussions will take place at a Eurogroup meeting in October.
Back in Athens, Tsipras may refer to the issue at a Cabinet meeting set for Friday, the first since the reshuffle.
Meanwhile, the latest high-profile comments on the same subject by a top minister came on Thursday, as Digital Policy Minister Nikos Pappas, one of Tsipras' closest associates, blaming the IMF for its insistence, as he said, on further social security cuts in recession-battered Greece.
Pappas took to Twitter on Thursday to write that the "...IMF's insistence on cutting pensions, as cited by (press) reports, doesn't cause surprise."
At the same time, he promised that the pending measure will be avoided, and serve as a "negative surprise to those (opposition politicians) who function based on coercion from abroad (the IMF, creditors) ... Greece and Portugal are in the same post-memorandum situation; visits by the institutions (creditors' auditors), discussion and reviews including the views of both sides; neither imposed measures, nor supervision. Portugal refused cuts in wages and pensions without any crisis arising," Pappas said.
