Greece’s three-party coalition government faces its toughest challenge since coming to power in June after leaders were unable to agree Tuesday on some of the structural reforms demanded by the troika, a development which has complicated the process of Athens receiving its next bailout tranche.
Prime Minister Antonis Samaras, PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis met Tuesday with the aim of tying up the loose ends in Greek negotiations with the troika. While the 13.5 billion euros of austerity measures have been virtually agreed, differences remained over some of the structural reforms.
Following the meeting, it quickly became apparent that these gaps had not been bridged. Kouvelis said that his party would not vote for the labor reforms being demanded by the troika, which include a cap being set on compensation for sacked workers.
“If the unacceptable demands of the troika are met, they will increase sackings, unemployment and the recession,” said Kouvelis, adding that he felt the troika was aiming to “flatten” any working rights that remain.
After Kouvelis, Venizelos also expressed reluctance to back the measures. As Samaras wants to pass all the fiscal measures as one bill and all the structural reforms as another, the only way PASOK or Democratic Left could display their opposition to changes in labor legislation would be to reject the whole package.
“It is unjustified and provocative that the issue of labor reforms should be brought up now,” stated Venizelos, who said the changes would not contribute toward Greece meetings its fiscal targets.
Two-and-half hours after the meeting, Samaras emerged to give a short statement in which he essentially called on his coalition partners to rethink their stance.
“I am well aware of what is at stake for the country today,” he said. “We have already changed a lot of the troika’s initial suggestions, including those relating to the labor market. Negotiations are continuing.
“I do not even want to think about what could happen if I do not keep a steady hand on the wheel. I am looking ahead, asking for the broadest possible unity. Those of us who dare will save Greece.”
Another issue that cropped up during the talks was objections from PASOK to an apparent proposal by the German Finance Ministry for the creation of an escrow account into which Greece’s loan tranches and tax revenues would be deposited and for which there would be some level of outside control. There is also a suggestion that the Germans would like there to be an automatic mechanism to limit public spending if the deficit is not within agreed targets.
“We are not a protectorate,” said Venizelos. “Our partners and the troika have to understand that.”
Earlier in the day, German Finance Minister Wolfgang Schaeuble had referred to “mechanisms” and “automatic stabilizers” without being specific.
“It will be politically difficult for Greece to accept,” he admitted.