Berlin’s plan for Greece after the memorandum
03.02.2014
11:17
Revealing article by Der Spiegel: New loan up to 20 billion euros guaranteed by ESM - Berlin pushes for tax collection, labor market deregulation, privatizations and land registry
Germany’s plans for Greece after the memorandum include pressure on the country, especially in view of the European elections, in order to accelerate reforms, mood for extensive concessions and financial support after the formal completion of the memorandum.
As a detailed reportage by Spiegel magazine reveals, the German Finance Ministry believe that the deficiencies in necessary changes in Greece are still huge, but before the risk of collapse for the "powers that support the euro", it is prudent to make concessions. The report of the ministry includes three suggested measures that could also be combined with each other:
- a "limited supplemental program" from 10 to 20 billion euros from the permanent ESM bailout mechanism without the IMF
- Greece must re-issue bonds that will have a higher performance than those of other European countries
- despite denials by the German Finance Ministry, there are reports of a possible new haircut of the Greek debt that will be borne by the Eurozone Member-States
The Greek side that focuses on that the German report, which recommends a comprehensive proposal for the management of the financial and funding gap for 2014-2016 in conjunction with the long-term settlement of the Greek debt, can leave the impression that its partners are thinking of solutions for the Greek economy excluding the Greek side and therefore become the subject of political controversy.
Meanwhile the Greek government armed with the higher than expected primary surplus, hopes to close the current negotiations with the Troika avoiding taking new budgetary measures. The representatives of its lenders insist that there is a difference of 2 billion euros in the fiscal gap of 2014.
As a detailed reportage by Spiegel magazine reveals, the German Finance Ministry believe that the deficiencies in necessary changes in Greece are still huge, but before the risk of collapse for the "powers that support the euro", it is prudent to make concessions. The report of the ministry includes three suggested measures that could also be combined with each other:
- a "limited supplemental program" from 10 to 20 billion euros from the permanent ESM bailout mechanism without the IMF
- Greece must re-issue bonds that will have a higher performance than those of other European countries
- despite denials by the German Finance Ministry, there are reports of a possible new haircut of the Greek debt that will be borne by the Eurozone Member-States
The Greek side that focuses on that the German report, which recommends a comprehensive proposal for the management of the financial and funding gap for 2014-2016 in conjunction with the long-term settlement of the Greek debt, can leave the impression that its partners are thinking of solutions for the Greek economy excluding the Greek side and therefore become the subject of political controversy.
Meanwhile the Greek government armed with the higher than expected primary surplus, hopes to close the current negotiations with the Troika avoiding taking new budgetary measures. The representatives of its lenders insist that there is a difference of 2 billion euros in the fiscal gap of 2014.
At the same time they insist on full implementation of the reforms in the OECD list with changes that will cause reactions in the professional groups that will be affected. Without them, however, the deal will be difficult to close in February.
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