Government braces for PPC backlash, troika return

PM, Venizelos to discuss prior actions

The government faces a difficult week as a controversial bill foreseeing the part-privatization of the Public Power Corporation (PPC) is set to go to Parliament on Wednesday amid vehement opposition by leftist SYRIZA and unionists to the measure, one of a series of so-called prior actions that Athens has pledged to the troika.

Prime Minister Antonis Samaras and his coalition partner, PASOK chief Evangelos Venizelos, are expected to meet in the next few days to discuss the PPC reform. The premier appeared to set the tone for the government’s stance in an interview with Germany’s Handelsblatt last week in which he stressed that Greek unions “will not dictate our course.”

The two coalition leaders, and Greece’s new finance minister, Gikas Hardouvelis, must also prepare for the scheduled return to Athens next week of troika officials. The envoys are to conduct a new audit of Greece’s finances, focusing chiefly on whether the government has made progress on two sets of six prior actions, each set linked to 1 billion euros in rescue loans.

The government has made headway with some of its commitments. A new zoning plan, which introduces changes to existing legislation in a attempt to attract investment and spur business activity, was approved in Parliament last week. In response to troika demands for the abolition of a series of third-party charges, the Development Ministry has set up an electronic platform, and has appealed for the help of citizens, to make a full list of such taxes.

Authorities must still enforce a new code of conduct for MPs and ministers and finalize measures reducing the profit margins of pharmacists among other actions.

The government is keen to show the troika that it is on track with reforms as this, along with its achievement of a primary budget surplus, are preconditions for the launch of talks on debt relief in the coming months.

However, faced with growing austerity fatigue in politics and society and an aggressive political opposition, the coalition is reevaluating its economic program, chiefly a series of taxes. Officials have indicated that a special tax on heating oil and a unified property tax are among the levies set to be reviewed; but they have stressed that the planned overhaul will not lead to Greece reneging on its pledges to foreign creditors.

It remains unclear how the troika envoys, who are due in Athens next week, will respond to these plans, and to government pledges to revoke cuts to the salaries and pensions of judges, police and armed forces staff and other employees of the civil service who have appealed against troika-mandated cutbacks. Reversing those decisions will cost the cash-strapped Greek state an estimated 1 billion euros and could set a precedent for the vindication of other civil servants who have taken legal action against measures imposed by successive Greek governments in exchange for rescue funding.