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| Tsipras expecting protest after Greece paves way for further privatisations | Tsipras expecting protest after Greece paves way for further privatisations |
| (about 2 hours later) | |
| The Greek prime minister, Alexis Tsipras, has warned of the perils that his government faces after jumping another reform-for-aid hurdle with international creditors. | |
| After a week of rigorous negotiations with foreign lenders, Tsipras’s leftist-led government finalised a deal foreseeing further privatisations, reforming the energy sector and opening up the market to non-performing loans. The agreement is slated to unlock another €1bn (£720m) in loans for the debt-stricken country next week. | After a week of rigorous negotiations with foreign lenders, Tsipras’s leftist-led government finalised a deal foreseeing further privatisations, reforming the energy sector and opening up the market to non-performing loans. The agreement is slated to unlock another €1bn (£720m) in loans for the debt-stricken country next week. |
| Addressing Syriza’s central committee at the weekend, Tsipras spoke of the dangers that lay ahead. “There are forces that want to see Greece’s government fail,” he said. | |
| Under the accord, publicised early on Saturday, Greece will retain a 51% stake in the national grid operator, Admie, and forge ahead with a host of state sell-offs through the creation of an expanded privatisation scheme. | |
| Related: Euclid Tsakalotos: Greek finance minister on the hard path of post-bailout reform | Related: Euclid Tsakalotos: Greek finance minister on the hard path of post-bailout reform |
| New rules for non-performing loans, which amount to an extraordinary 60% of GDP, will also be enacted. Those belonging to big businesses as well as unpaid mortgage repayments will henceforth be sold to foreign funds. | New rules for non-performing loans, which amount to an extraordinary 60% of GDP, will also be enacted. Those belonging to big businesses as well as unpaid mortgage repayments will henceforth be sold to foreign funds. |
| Viewed as a compromise by many in Tsipras’s once far-left Syriza party, the deal, to be voted on Tuesday, is expected to be passed in the name of national expediency. Failure to endorse the legislation would derail the country’s bailout programme and put Greece, which only narrowly survived a euro exit before clinching a third €86bn rescue package in July, at risk of national bankruptcy again. | |
| But Tsipras is unlikely to be let off as lightly in the new year, when his fragile two-party coalition will be obliged to overhaul a dysfunctional pension system that is not only on the verge of collapse but is seen as the most expensive in Europe. Creditors are demanding the overhaul produces the equivalent of 1% of GDP, or €1.8bn, in savings next year. | But Tsipras is unlikely to be let off as lightly in the new year, when his fragile two-party coalition will be obliged to overhaul a dysfunctional pension system that is not only on the verge of collapse but is seen as the most expensive in Europe. Creditors are demanding the overhaul produces the equivalent of 1% of GDP, or €1.8bn, in savings next year. |
| With Greek pensioners already having suffered 12 cuts since the outbreak of the debt crisis in late 2009, MPs are likely to balk at further austerity being meted out. | With Greek pensioners already having suffered 12 cuts since the outbreak of the debt crisis in late 2009, MPs are likely to balk at further austerity being meted out. |
| The prospect of turmoil has been heightened by the government’s parliamentary majority being whittled down to a mere three seats in the 300-member house, after two deputies defected in a vote on an earlier set of milestones last month. | The prospect of turmoil has been heightened by the government’s parliamentary majority being whittled down to a mere three seats in the 300-member house, after two deputies defected in a vote on an earlier set of milestones last month. |
| The pro-European opposition parties that helped push through Greece’s bailout programme in the summer have refused to do the same again on the toxic pensions issue. | The pro-European opposition parties that helped push through Greece’s bailout programme in the summer have refused to do the same again on the toxic pensions issue. |
| Yet creditors have set pension reform as the condition to concluding a first review of the Greek economy, itself key to opening a discussion on the country’s staggering €320bn debt. With Athens’ GDP-to-debt ratio projected to reach 180% next year, real economic recovery is ruled out unless debt relief is given. | Yet creditors have set pension reform as the condition to concluding a first review of the Greek economy, itself key to opening a discussion on the country’s staggering €320bn debt. With Athens’ GDP-to-debt ratio projected to reach 180% next year, real economic recovery is ruled out unless debt relief is given. |
| Precisely because pension reform is such a tinderbox issue, lenders reluctantly agreed to tackle it in January. Athens has instead proposed the option of employers increasing social security contributions, but so far creditors, led by the International Monetary Fund, have steadfastly stuck to their guns. | Precisely because pension reform is such a tinderbox issue, lenders reluctantly agreed to tackle it in January. Athens has instead proposed the option of employers increasing social security contributions, but so far creditors, led by the International Monetary Fund, have steadfastly stuck to their guns. |
| The war of words spurred Tsipras to declare last week that the IMF was being “unconstructive” and to question whether the Washington-based body was needed in the disbursement of further bailout assistance. Under Greece’s previous bailout accord, IMF loans officially dry up in March. | The war of words spurred Tsipras to declare last week that the IMF was being “unconstructive” and to question whether the Washington-based body was needed in the disbursement of further bailout assistance. Under Greece’s previous bailout accord, IMF loans officially dry up in March. |
| Tsipras’s outburst triggered an irate response from Berlin, the biggest contributor of bailout funds so far, with the German government insisting that the global lender was vital to not only enforcing tough discipline but reassuring German legislators. The IMF has based its tough stance on doubts that recession-wracked Greece will be able to attain fiscal targets and achieve a primary surplus of 3.5% of GDP in 2018. | Tsipras’s outburst triggered an irate response from Berlin, the biggest contributor of bailout funds so far, with the German government insisting that the global lender was vital to not only enforcing tough discipline but reassuring German legislators. The IMF has based its tough stance on doubts that recession-wracked Greece will be able to attain fiscal targets and achieve a primary surplus of 3.5% of GDP in 2018. |
| The abrupt flare-up has again highlighted the explosiveness of Athens’ relations with lenders and brought into stark relief the ability of a government, so ideologically at variance with many of the reforms, to remain committed to its latest bailout programme. | The abrupt flare-up has again highlighted the explosiveness of Athens’ relations with lenders and brought into stark relief the ability of a government, so ideologically at variance with many of the reforms, to remain committed to its latest bailout programme. |