A closer look at Greece’s proposed reforms

Greece’s new leftwing Syriza government has talked of killing the country’s current bailout deal. Yet many of the reform pledges it spelt out in a letter to the eurogroup on Tuesday bear a striking resemblance to those made but not implemented by previous Greek finance ministers.

Others seem calibrated to give space for Yanis Varoufakis, Greece’s new finance minister, to claim he has kept faith with Syriza’s so-called “Thessaloniki programme”. This is a collection of anti-austerity policies endorsed by multiple factions in the hardline “Left Platform”, which is said to represent about one-third of party activists.


Greece has submitted the reforms to persuade its 18 eurozone partners to extend its bailout by four months, putting it on a path to collect about €7.2bn in loan payments by June.

Its gaps and omissions will presumably be filled in during negotiations with the group of institutions that have overseen the bailout and were until recently known as the “troika” — the European Commission, the International Monetary Fund and the European Central Bank.

Here are a few, decoded, points to ponder on key issues:

Privatisation: Syriza’s opposition to privatisation seems to have evaporated. The government commits not to reverse sales that have been completed, while “respecting the legal process” in the case of tenders already launched.

This is good news for Cosco, the Chinese state shipping company, and Maersk of Denmark, the frontrunners among bidders shortlisted for a two-thirds stake in Piraeus Port Authority. It implies, too, that a consortium led by Frankfurt airport that was named preferred bidder for a 40-year concession to run Greece’s regional airports will be able to wrap up the deal as planned.

But the question remains: will Panagiotis Lafazanis, the energy minister and Left Platform leader who declared last month that privatisation was “over”, try to obstruct the sales of the electricity grid and part of the state power utility, which are both at an earlier stage?

Tax policy: Despite Syriza’s promise not to increase taxes, Mr Varoufakis appears willing to comply with the IMF’s longstanding demand that concessionary VAT rates charged on Aegean Islands should be raised to the standard level. Such a measure would raise revenues significantly but was headed off by previous governments because of pressure from local politicians.
Revenue administration: The Syriza government will bolster the independence of the general secretary for public revenues “from all sorts of interference (political or otherwise) while guaranteeing full accountability and transparency of their operations”. This amounts to a commitment to ensure that the country’s top tax collector will not be forced out, as happened in June to Haris Theoharis after he asked several prominent Greek company owners with political connections to pay up.


Banking: A partial win for the Syriza government, which is committed to banning foreclosures for homeowners unable to pay their mortgages. Mr Varoufakis says the government will “collaborate with bank managements and the institutions to avoid, in the forthcoming period, auctions of the main residence of households below a certain threshold, while pursuing strategic defaulters”.

Labour market: A defeat for the government, which has pledged to revive collective wage bargaining and increase the minimum wage to the pre-crisis level by 2016.

Mr Varoufakis has signed up to the “phasing in of a new ‘smart’ approach to collective wage bargaining . . . would include the ambition to streamline and over time raise minimum wages in a manner that safeguards competitiveness and employment prospects”.

A confrontation is on the cards, as boosting wage competitiveness and labour market flexibility were key achievements in the eyes of the troika. But the Left Platform will press Mr Varoufakis for a firm timetable on rolling back both reforms.


Kerin Hope


Fonte: FT