Last Monday an extraordinary European Union summit seemed to reach a turning point in the settlement of Greece’s debt crisis. When the summit was over, European Commission President Jean-Claude Juncker said he was sure this problem would be resolved by Wednesday, June 24. According to Donald Tusk, President of the European Council, EU ministers of economics will be discussing the financial problems of Greece on that day. Juncker also said that the final decision on Greece might be made at a regular EU summit in Brussels on June 25-26. Meanwhile, IMF Managing Director Christine Lagarde and Eurogroup president Jeroen Dijsselbloem believe that the Greece crisis negotiators are in for 48 hours of hard work.
It will be recalled that negotiations between Athens, the European Commission, the IMF, and the European Central Bank have been in progress for five months. They have reached a deadlock because creditors are unwilling to give Greece the last tranche worth 7.2 billion euros until Athens agrees to carry out reforms. And it was not clear to the last day whether the Greek government would offer a realistic plan to settle the debt crisis, which would particularly envision reforms. For the Greek delegation was bringing the same proposal to Brussels all the time: forgive us our debt and give money.
And only on Sunday did the Greek government propose a realistic plan to resolve the Greek crisis. Greece’s Minister of Economics, Giorgos Stathakis, said in detail about his country’s new proposals to creditors in a BBC interview. He said the idea is to shift the debt burden onto businesspeople and the well-to-do as well as to increase VAT on certain commodities.
The President of the European Council, Donald Tusk, said on Monday that the latest proposals of Greece had been “the first true proposals in the past few weeks.” Eurozone ministers of finance have also welcomed these plans and said that an agreement could be reached “within a few days.”
It will be recalled that Greece is to pay 1.6 billion euros to the IMF before the end of June. Should the country fail to do so, it will be running the risks of being withdrawn from the Eurozone and even the EU. Stathakis said that, thanks to the new proposals of Alexis Tsipras’ government, the red line would not be crossed.
In his words, there will be no pension and wage cuts in the public sector, and electricity taxes will not be raised either. The minister said the government had agreed with the IMF and Eurozone that the planned budgetary surplus would be one percent of GDP this year, two percent the next year, and three percent in three years later. In his words, creditors are not going to reduce Greece’s debts, even though SYRIZA has insisted on this before. But Stathakis expects this issue to emerge on the negotiations’ agenda in the next few months.
Still, Eurozone ministers of finance are saying they have not yet properly studied the new proposals. After the meeting, the chief of the group of Eurozone finance ministers, Jeroen Dijsselbloem, described these proposals as “broad and comprehensive” but noted that they should be examined “from the fiscal angle.”
The Day has asked Pavlo SHEREMETA, ex-minister of economics of Ukraine, to comment on the Greek debt problem resolution and on the lessons Kyiv should draw from this before it begins talks with the EU.
“Indeed, the Greeks have put forward a better proposal for riding out the crisis than they have done before. For their previous proposal was: we forgive all. This looked, of course, funny to the Germans. It even looked funny to the Latvians who said to the Greeks: ‘Here is the way you forgive us: we have given you an amount that equals our unemployment relief fund. But for you, Latvia would have doubled its unemployment relief fund.’
“Naturally, all the previous proposals were absolutely inadmissible for the European Union. Now the Greeks have understood that this option won’t do at least in the current conditions and have offered something slightly better. And they could play so as long as they want, but there is one thing: this government does not want to drop the euro. Culturally, the Greeks do not want so far to work as northern Europeans do, which creates a problem for the euro. And no one wants to pay out their debts. It is also clear. This is why the Greeks have given in to this populism and elected this party, but they do not want to leave the Eurozone. And when they were advised to leave, this position of the EU made them slightly moderate their demands.
“The factor that has influenced the compliancy of Athens is that the Greek government is not prepared to drop the euro. The European Union said: ‘If this is your attitude, then goodbye. It is bad for us, but we will survive, and it is your problem whether or not you will survive this.’ And the Greek government said to this: ‘Then we will revise our position a little.’
“As for the Russian factor in the Greek crisis, will Russia ever substitute the euro? It was just a play on nerves in Europe, much to Russia’s delight. But what can Russia do? It cannot give this amount of money, nor can it substitute the euro. I don’t think the Greeks would like to join the ruble zone. In spite of all these Orthodox protests, the Greeks would like to stay behind with the euro.
“Speaking of Greece’s tactic at the EU negotiations, it is baby talk. It is not a bad tactic. You must just grow up and assume responsibility for your problems.
“Ukraine and Greece have similar cultures and, accordingly, similar problems. Firstly, it is chronic dependency on the budget deficit. Secondly, it is inability to work the way Northern Europe or Germany does. It is not fatal, but one must simply learn this. And, for this, you should change, but you don’t feel like changing – instead, you feel like living on credit. Both Greece and Ukraine should live within their means. They should produce competitive products and services, as do Germany, Sweden, and other countries that do not live on credit and have a surplus budget and trade balance.”
