Prime Minister Antonis Samaras is preparing for crucial talks with his coalition partners on Wednesday in a bid to present a united front on a series of reforms demanded by foreign creditors who are sending inspectors back to Athens later this week.
Negotiations with troika mission chiefs, who are expected in Athens by Thursday, are expected to focus on a much-delayed downsizing of the civil service, on lagging tax collection and on the planned merger of National Bank and Eurobank. The talks, which broke off last month amid a disagreement on the civil service overhaul, are to determine whether or not Greece receives the next tranche of rescue funding from its international creditors, worth 2.8 billion euros. But the conservative-led administration faces several hurdles in clinching the troika’s approval.
First of all, there are objections from the two coalition partners – socialist PASOK and Democratic Left – with the former taking issue with the conservative leadership’s stance toward the troika in recent months and Democratic Left opposing plans for an unpopular property tax to continue to be levied via electricity bills.
A second problem is the worsening climate in the eurozone following the tense negotiations on the Cyprus bailout which has fuelled speculation about a tax on bank deposits being imposed in other member states if deemed necessary.
A third barrier, which is sure to feature high on the agenda of talks, is Greece’s estimated fiscal shortfall of 2.7 billion euros. It is considered unlikely that troika officials will seek new austerity measures to cover this gap, as such a move would doubtlessly fuel social tensions, but they are unlikely to show much flexibility on the need for enforcing measures already pledged to creditors such as the downsizing of the civil service.
A revised blueprint for putting at least 25,000 civil servants into a labor reserve scheme next year was sent to troika chiefs last month. But plans to accelerate the process of dismissing some 4,000 oath-breaking public sector workers appear to have stalled with several key ministries lacking the disciplinary committees to rule on the cases.