As 1-billion tranche approved, coalition split over details of foreclosure legislation

Greece received the green light from Brussels on Tuesday for the release of another 1 billion euros in bailout funding but in Athens there was still little progress on settling how a ban on some home foreclosures would be lifted.

The relief from the news that the delayed July sub-tranche would finally be transferred to the Greek government this week was to some extent overshadowed by disagreements within the coalition and in Parliament about the thorny issue of the foreclosures moratorium.

Until last night, there were still differences between the Development Ministry and PASOK about what kind of protection would be offered once the current ban expires at the end of the year. There was also a lack of clarity about how the new framework would be legislated.

One option is to attach it as an amendment to the property tax bill, which MPs are due to vote on Friday. The levy, in its new and unified format, received the approval of Parliament’s finance committee on Tuesday, although only New Democracy and PASOK voted for it.

However, adding it to the property tax bill would mean that it would be brought before Parliament at the same time as Prime Minister Antonis Samaras would be attending the European Union leaders’ summit in Brussels. There is unease within the Greek government that this may be seen as a message of defiance against the troika, which will not be able to approve or reject the new framework for foreclosures as its inspectors have left Greece and are not due back until around the middle of January.

The final option is for a legislative decree to be issued, essentially bypassing Parliament.

In Brussels, Finance Minister Yiannis Stournaras said that after the release of the latest tranche, Athens’s aim now is to wrap up the current troika review by January 27. He said that this would then be followed by a discussion about how Greece’s fiscal gap would be covered, since there is only 10.2 billion euros left to be disbursed by its eurozone partners under the terms of the current program. The minister insisted that the gap could be covered without the need for a new bailout.

He also said he was satisfied with the compromise that had been reached over the future of Hellenic Defense Systems (EAS) to trigger the release of the 1-billion-euro installment.

“The solution we agreed was the result of good bi-ministerial cooperation and safeguards the supply of the Greek armed forces,” he said, praising in particular the input from the prime minister and his adviser Stavros Papastavros and Deputy Defense Minister Fofi Gennimata.

Stournaras said that a voluntary redundancy program would reduce staff numbers from 818 to around 500, and that in May EAS would be split into civilian and military arms.

The state subsidies that EAS has received in contravention of EU rules will be loaded onto the civilian firm, which will close down. The military company will be given a certain amount of time to deliver profits or face closure as well.

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