Greece's European creditors suspend debt relief measures
European creditors on Wednesday pulled a recently announced debt relief package for Greece in protest at subsequent budget spending measures announced by Athens.
At a meeting of the eurozone's 19 finance ministers, Greece's creditors offered some immediate debt help to Greece. They include smoothing some of Greece's repayments to prevent debt humps and a waiving of an interest rate increase. Officials said the measures could chop 20 percentage points off Greece's debt burden through to 2060. Greece's debt is worth around 180 percent of its GDP, a level experts consider unsustainable.
Days after that agreement, however, Greek Prime Minister Alexis Tsipras, announced that his government would distribute 617 million euros ($650 million) this Christmas to some 1.6 million low-income pensioners, replacing a holiday bonus scrapped by Greece's bailout creditors, and whose reinstatement had been a key electoral pledge by Tsipras' Syriza party. Tsipras also said his government would restore a lower sales tax rate for Aegean Sea islanders who are struggling to cope with mass arrivals of migrants from Turkey.
Taken by surprise by Greece's new spending measures, the eurozone creditor nations said Wednesday that they want more information on whether the costs will affect Greece's ability to meet its financial targets.
The eurozone's strong reaction was given added weight as it came on the eve of a year-end European Union summit where Tsipras is set to discuss the state of his debt-ridden nation with other leaders. To further complicate matters, Greece is also involved in a public spat with the International Monetary Fund, a key bailout creditor, over the need for future spending cuts.
Tsipras defended the spending measures earlier, in comments made before the eurozone suspended its debt relief measures, and said he had "no doubt" over their legitimacy. He noted that Greece has to deal with its economic difficulties at a time when it's also at the front line of the immigration crisis. "In the name of Europe, the Greek people are making sacrifices, and everyone must show respect for this," Tsipras said.
Analysts said the eurozone's move puts Tsipras in a tough situation and could pave the way for early elections. "If Tsipras goes ahead, this would further antagonize the eurozone creditors, putting at risk the promised short-term debt relief," said Wolfgango Piccoli, co-president of Teneo Intelligence. "On the other side, giving in to the creditors' pressure would make Tsipras look amateurish at best, and at worst, further undermine his credibility and standing domestically."
Although the government has repeatedly ruled out early elections, a cabinet minister from Tsipras' small right-wing coalition partner said Wednesday that the eurozone's "brutal blackmail" should change that. "The only civilized solution would be to call elections and say that ‘This is the situation, we are being blackmailed,'" Kostas Zouraris, a deputy education minister, said. "For centuries, Greeks have been mercilessly oppressed by the Westerners."
Opinion polls show that the center-right New Democracy party has double-digit leads over Syriza and that it would likely form the next government. Anti-austerity protests - which Tsipras' Syriza party spearheaded while in opposition - have continued under the left-led government. On Wednesday, about 80 state hospital workers, who were holding a six-hour work stoppage, protested outside the health ministry against state spending cuts. They symbolically bricked up the building's entrance before marching through the city center.
Opposition from France over
Greek debt reliefFrance opposes the decision by the eurozone to suspend debt relief for Greece after Greek Prime Minister Alexis Tsipras hiked spending for pensioners, Finance Minister Michel Sapin said yesterday.
Sapin suggested the decision had not been taken unanimously by the 19-member eurozone, with austerity champion Germany known to have pushed for cutting off further aid to the debt-wracked country.
"Individual statements are not the collective statements of the eurogroup," Sapin told reporters, putting France at odds with the decision announced on Wednesday morning. Sapin also backed Tsipras, saying "no government has kept its promises as much" as his.
France has traditionally taken a far softer line on Greece than Germany during the years of negotiations over Athens' crippling debt and need for bailout funds. Sapin insisted that "the debt relief measures will be put in place" despite the decision announced on Wednesday by Eurogroup chief Jeroen Dijsselbloem, the head of the eurozone club.
At a meeting of the eurozone's 19 finance ministers, Greece's creditors offered some immediate debt help to Greece. They include smoothing some of Greece's repayments to prevent debt humps and a waiving of an interest rate increase. Officials said the measures could chop 20 percentage points off Greece's debt burden through to 2060. Greece's debt is worth around 180 percent of its GDP, a level experts consider unsustainable.
Days after that agreement, however, Greek Prime Minister Alexis Tsipras, announced that his government would distribute 617 million euros ($650 million) this Christmas to some 1.6 million low-income pensioners, replacing a holiday bonus scrapped by Greece's bailout creditors, and whose reinstatement had been a key electoral pledge by Tsipras' Syriza party. Tsipras also said his government would restore a lower sales tax rate for Aegean Sea islanders who are struggling to cope with mass arrivals of migrants from Turkey.
Taken by surprise by Greece's new spending measures, the eurozone creditor nations said Wednesday that they want more information on whether the costs will affect Greece's ability to meet its financial targets.
The eurozone's strong reaction was given added weight as it came on the eve of a year-end European Union summit where Tsipras is set to discuss the state of his debt-ridden nation with other leaders. To further complicate matters, Greece is also involved in a public spat with the International Monetary Fund, a key bailout creditor, over the need for future spending cuts.
Tsipras defended the spending measures earlier, in comments made before the eurozone suspended its debt relief measures, and said he had "no doubt" over their legitimacy. He noted that Greece has to deal with its economic difficulties at a time when it's also at the front line of the immigration crisis. "In the name of Europe, the Greek people are making sacrifices, and everyone must show respect for this," Tsipras said.
Analysts said the eurozone's move puts Tsipras in a tough situation and could pave the way for early elections. "If Tsipras goes ahead, this would further antagonize the eurozone creditors, putting at risk the promised short-term debt relief," said Wolfgango Piccoli, co-president of Teneo Intelligence. "On the other side, giving in to the creditors' pressure would make Tsipras look amateurish at best, and at worst, further undermine his credibility and standing domestically."
Although the government has repeatedly ruled out early elections, a cabinet minister from Tsipras' small right-wing coalition partner said Wednesday that the eurozone's "brutal blackmail" should change that. "The only civilized solution would be to call elections and say that ‘This is the situation, we are being blackmailed,'" Kostas Zouraris, a deputy education minister, said. "For centuries, Greeks have been mercilessly oppressed by the Westerners."
Opinion polls show that the center-right New Democracy party has double-digit leads over Syriza and that it would likely form the next government. Anti-austerity protests - which Tsipras' Syriza party spearheaded while in opposition - have continued under the left-led government. On Wednesday, about 80 state hospital workers, who were holding a six-hour work stoppage, protested outside the health ministry against state spending cuts. They symbolically bricked up the building's entrance before marching through the city center.
Opposition from France over
Greek debt reliefFrance opposes the decision by the eurozone to suspend debt relief for Greece after Greek Prime Minister Alexis Tsipras hiked spending for pensioners, Finance Minister Michel Sapin said yesterday.
Sapin suggested the decision had not been taken unanimously by the 19-member eurozone, with austerity champion Germany known to have pushed for cutting off further aid to the debt-wracked country.
"Individual statements are not the collective statements of the eurogroup," Sapin told reporters, putting France at odds with the decision announced on Wednesday morning. Sapin also backed Tsipras, saying "no government has kept its promises as much" as his.
France has traditionally taken a far softer line on Greece than Germany during the years of negotiations over Athens' crippling debt and need for bailout funds. Sapin insisted that "the debt relief measures will be put in place" despite the decision announced on Wednesday by Eurogroup chief Jeroen Dijsselbloem, the head of the eurozone club.
Last Update: December 16, 2016 02:03