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No troika deal in December as Greece falls behind with bailout pledges [update]

Even if the Troika returns to Athens on Wednesday, officials involved in the Program warn that chances of completing the review by year’s end, i.e. before the start of Greece's EU Presidency, are minimal.

By Nikos Chrysoloras

Brussels - The chiefs of the troika mission to Greece are due to return to Athens this coming week but the full technical teams will not be in the Greek capital, Kathimerini understands.

Klaus Masuch of the European Central Bank, Matthias Mors of the European Commission and Poul Thomsen from the International Monetary Fund are expected to remain in Athens for around a week and then return with the full technical teams in January provided that Greece has made progress in meeting its bailout commitments.

Simon O'Connor, a European Commission spokesperson for economic and monetary affairs, said in a brief statement on Saturday night that although some troika inspectors were due to return to Athens next week, negotiations would not have a chance of concluding until January at the earliest.

“Technical discussions are expected to continue in Athens next week,” he said. “We expect a full negotiating team to return to Athens in January, after the authorities have made further progress in implementation, with the objective of reaching a staff level agreement.”

Kathimerini has been informed that the troika mission chiefs wanted this press line to accompany their return to Athens to make it clear that talks would not be concluded during this visit. The aim is to play down expectations so a troika departure without a deal will not be seen as another blow to relations between Greece and its lenders. This qualifier was made public shortly before a crucial vote on the 2014 Greek budget on Saturday night despite the Finance Ministry making its objections known since Thursday.

A European official, speaking on condition of anonymity, told Kathimerini: “Mission chiefs return on Wednesay but with reduced teams. They should stay about a week. Full teams will then return in January. As much progress as possible will be made in December and if we can conclude on any issues, of course we will. No one wants this to go on longer than necessary. But given the amount of issues still open, a full staff level agreement in December is just not realistic.”

The same official said it was pure coincidence that the announcement was made as MPs were preparing to vote on the 2014 budget.

Earlier this week, the eurozone's troika partners received an e-mail from the International Monetary Fund detailing Greece’s record of compliance with its adjustment program commitments since last summer. The data table included in the e-mail left no room for doubt: Not only are we nowhere near the conclusion of the autumn review of the Greek program, but the situation is slowly but steadily deteriorating.

In July, Greece completed 28 of its 35 memorandum (MoU) commitments; in August its record fell to 15 out of 26. In September, things got even worse as Greece completed 13 out of 47 agreed actions and in October only four out of 20. And, in November, Greece did not fulfill any of its seven commitments.

Overall, Athens was supposed to fulfill 135 commitments for the successful conclusion of the autumn review. We are still at 60 and progress is getting slower by the day, amid a political stalemate in Athens, where the government is struggling to appease its backbench MPs and protect its wafer-thin parliamentary majority.

In his visit to Brussels last Wednesday, Greek PM Antonis Samaras said he was confident the review would be over before the end of December.

Eurozone governments also want the Greek review "soap opera," which started last September, to end as soon as possible. From January onwards, Greece is expected to lead the negotiations between the Council and the European Parliament, aiming at the completion of the legislative process for the "second pillar" of the banking union before May’s European elections. This is the most important reform in the functioning of the eurozone since the introduction of the common currency. Seen from that perspective, the endless talks between the troika and the Greek Finance Ministry are an unwelcome distraction.

Moreover, eurozone governments are expected to agree on a new round of measures, which will ease Greece’s debt servicing burden in the summer of 2014, once it has been established that the country has achieved a primary budget surplus. It will be politically unfeasible to convince their parliaments to agree on such measures if the Greek reform program appears, once again, to be off track.

Finally, eurozone governments seem to be well aware of the dire social situation in Greece, the consequent rise of political extremism and the dangers of political instability. The eurozone is slowly trying to make its way out of the painful double-dip recession and Greece is the only wound left that is still bleeding uncontrollably.

Therefore, despite the fact that the review has been going for three months, both the chancellor and the finance minister of Germany continue to praise Greece’s performance and ask for the Greek people to be shown "respect".

But troika officials, entrusted with making good use of hundreds of billions of euros of taxpayers’ money channeled to Greece via cheap loans, remain cautious. They tell Kathimerini that there is movement in the right direction but it is going very slowly and there are still a lot of outstanding issues on which the authorities have to deliver. That, plus backtracking on earlier commitments, makes it very likely that the talks will drag on into next year.

Another EU official is even more blunt: the Greek government’s apparent intention of unilaterally legislating or deciding on open issues related to the review, like foreclosures, reduced VAT in restaurants or mass dismissals, without prior consultation with the troika, is not just unhelpful but is seen as a provocation.

To be sure, EU technocrats do not deny there has been progress.

According to the IMF and the EU Commission, Greece has achieved an unprecedentedly rapid correction of its fiscal and current account imbalances, in conditions of wartime-like depression. It is an achievement unseen anywhere else in the developed world. And the World Bank, the OECD and the Lisbon Council all agree that Greece is the world's champion in structural reforms. Other organizations, like the World Economic Forum in its "Global Competitiveness Rankings," and Transparency International in its "Corruption Perceptions Index" also see significant progress. But troika officials believe that this progress is, in part, the result of their relentless insistence on Greece complying with its commitments.

Staff-level sources also appear conscious of the direction of political winds in Europe and that everyone wants a happy end to this drama. But "not at any cost," an official has told Kathimerini, adding that the troika has already made enough concessions to Athens and it is now up to the Greeks to start delivering on their autumn 2013 commitments, listed in the MoU. Another EU official reminded Kathimerini that German Chancellor Angela Merkel also publicly applauded former Prime Minister George Panadreou’s efforts three years ago: "We all know what happened to him," he said.

ekathimerini.com , Sunday December 8, 2013 (11:59)  
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