Fresh Aid Greece Plans to Impress Creditors With Good News

A SPIEGEL report that German Finance Minister Wolfgang Schäuble is considering a third rescue package for Greece has electrified the struggling nation. Athens wants to impress its creditors with a stream of good news. But it still has a long list of unkept promises.
The Greek parliament.

The Greek parliament.

Foto: Alkis Konstantinidis/ dpa

New loans are welcome, but don't ask us for any new austerity measures. This pretty much sums up Athens' reaction to Germany's reported willingness to approve further loans to Greece  to cover the country's multi-billion euro projected financing gap in 2015-2016.

Although there was no official reaction to SPIEGEL's report, published on Monday, government sources say that Berlin's intentions were known to Prime Minister Antonis Samaras, adding that Germany will not pull the rug from under Greece's feet, especially with the European election due in May.

But the Greek government has also made clear that it will not accept a new round of measures or a continuation of what are perceived by many in Greece as the asphyxiating and humiliating controls by the troika of European Commission, European Central Bank and International Monetary Fund.

Finance Minister Yannis Stournaras is preparing Greece's position ahead of the troika's arrival. With a fresh round of bargaining looming on the new loans, he promised an avalanche of "impressively good news" in the coming days to show that Greece doesn't need any further belt-tightening. It only needs to press on with its structural reforms, he said.

According to a Greek Finance Ministry official, the good news will include the first increase of retail sales in 43 months, and the first rise in the purchasing managers' index in 54 months. The "super-weapon" in Stournaras' arsenal, however, is the hefty 2013 primary budget surplus, now estimated at €1.5 billion, well above the official budget forecast of €812 million.

The same official said the expected good news was the reason why Athens doesn't want the troika to return earlier to conclude a much-delayed round of inspections that started in the autumn.

Stournaras is expected to present Greece's accomplishments to German officials when he visits Berlin later this week. The final details of his trip are still being worked out.

Athens also plans a return to the markets by the end of 2014 in what it believes will be a definitive sign that the Greek economy is out of the woods.

Reactions to SPIEGEL Report

With the leftist opposition alliance Syriza leading most opinion polls, some observers say the Greek government needs to be able to show success soon. Athens was therefore quick to react to the reports about new loans, telling the public it should not fear a new wave of measures.

SPIEGEL's report was featured in the front pages of the Greek press this week with conflicting interpretations.

Monday's headline of top selling center-left daily Ta Nea was "Promise for final solution for Greek debt in April." The newspaper says the new loans will come "without a new memorandum" between Greece and its lenders.

The conservative daily Dimokratia had a different approach: "Schäuble plan for a new round of torture" read its headline, with the newspaper arguing that the new loans will be accompanied by "brutal measures."

Reforms on Hold

Some analysts say the discussion about reforms is pointless since Greece has failed to comply with many obligations it has already agreed on. The Sunday edition of conservative daily Kathimerini published a list with 153 open issues and policies Athens has failed to implement despite its obligations arising from the deal with the troika, including new delays in going forward with public sector dismissals.

There is also concern that the much-hyped budget surplus could trigger demands for spending increases. Samaras has already promised to spend most of it on supporting those worst hit by the crisis. A series of court rulings vindicated the elite of public sector employees who challenged the extensive cuts imposed on the military and police, the judicial corps, doctors and university professors.

If the money has to be repaid, it could cost the government more than €1 billion. The government has said it will not raise taxes or impose new ones to cover the cost, and one scenario being discussed is to return the money gradually over a 10-year period.