Greek debt crisisWhat’s on the table in the Greek debt negotiations?
Pensions
Reduce pension paymentsThe troika believe that Greece can save 1% of GDP by cutting pensions. The Greeks counter that they have already cut pensions by nearly half and that further cuts would impoverish whole families; they say 1 million households depend on a pensioner’s income Phase out ‘solidarity payments’The troika want Greece to end its top-up payments to poor pensioners. The Greek finance minister was strongly opposed last week. Tsipras’s memo on Monday seems to concede this point Increased pension contributions Greece’s 22 June proposals include raising pensions contributions from those working, and increasing medical costs in (means-tested) social security charges for pensionersEnd early retirementBoth sides are keen to end the common Greek practice of early retirement Raise retirement ageThe June 22 proposals include an undertaking to raise the pension age to 67 by 2025; a detail that this excludes ‘arduous professions’ may allow further disagreement
Balancing the books
Budget surplusThe troika want Greece to commit to a budget surplus of 1% in 2015, rising to 3.5% by 2018. The Greeks agree in principle, but believe they can meet these objectives without, for instance, the cuts to pensions which the troika believe are a prerequisite Reduce overall debt burdenBoth Greece and the institutions want to reduce Greece’s overall debt burden, which they agree is unsustainable at 180% of GDP. The institutions have firm beliefs about what sorts of measures can achieve this; namely, running a large surplus, which in turn is best achieved by cutting the state pension bill Debt swapsVaroufakis wants what amounts to a third bailout; a new loan from the Eurozone Stability Mechanism with which Greece can buy back its current debts to the ECB. He says that this does not amount to new money, but it probably does mean longer repayment terms Debt forgivenessTsipras and Varoufakis have both at one time or another suggested that Greece’s overall debt burden can only really be reduced by write-offs. Angela Merkel has voiced her disagreement Third bailoutNeither side is making much mention this week of further bailouts Release remaining 2012 bailout fundsBoth the eurozone and the IMF have monies earmarked for Greece, which the country badly needs if it is to continue to meet its debt repayments, but they are withholding them until Greece commits to all of the measures they suggest
VAT
11%/13% VAT rateThe institutions want a basic rate of VAT to apply to medicines and food. The Greeks want this rate to apply also to utilities, notably electricity. The rate is now being talked about at 13%; earlier Greek proposals pitched it at 11%16% VAT rateThe Greeks want an additional VAT rate of 6% (a cut from the existing rate of 6.5% ...) to apply to medicine, books and theatre 123% VAT rateGreece’s June 22 proposals controversially include restaurant bills in the main VAT rate, causing disquiet at home
Liberalise trade
Liberalise tradeIn practice this means cutting regulation about, for instance, who can sell non-prescription medicines or operate ferry services. There have been pharmacists’ strikes about these proposals but the Greeks have not put up strong resistancePrivatisationThe reform programmes provide for the privatisation of ports and airports and the sale of broadcast and telecoms spectrum rights. Some of this, notably the sale of the port of Piraeus, is already under way
Administrative reform
Restricting collective bargaining Among broad agreement that ‘labour reform’ is necessary, there is surprisingly passionate disagreement about collective bargaining. The institutions want to restrict it; Varoufakis is strongly opposed. Tsipras’s latest memo has an emollient line about ‘constructive dialogue among social partners’ ... Antievasion measuresBoth sides agree that if the tax take could be maximised by ensuring all economic activity were declared this would be better than raising taxes on that which is already known Cut red tape The troika demand specific measures to cut red tape; a prohibition on government departments asking citizens to get documentation from other government departments, and setting up ‘one-stop shops’ where citizens can conduct business with multiple departments Anticorruption measuresReducing corruption to bring down government costs; everyone agrees this is a good thing
