THE ECO SCAN – The Greek Prime Minister has decided to call the citizens back to the polls as the agreement signed with Europe last month and the economic impasse in which Greece finds itself have pushed him to reconsider a good part of the political program which had enabled him to take the reins of power.
decided to go back to voters on Thursday during a televised address. The man who triumphantly won the Greek legislative elections on January 25 has had a tumultuous year since then. The agreement signed with the European partners on July 13, although rejected a week earlier by referendum, and the economic impasse in which Greece finds itself have prompted it to reconsider a large part of the political program which had enabled it to take the reins of power.
• Taxation: all Greeks will pay
Alexis Tsipras wanted to intensify taxation on the richest, and on companies (with an increase in corporate tax, and an additional tax on profits above 500,000 euros). And even if certain tax exemptions concerning the wealthiest will disappear (shipowners, liberal professions, island owners, etc.), and corporate tax has been raised by 2 points (from 26% to 28%), the main reform which suddenly increases from 13% to 23%, thus significantly increasing the expenditure of all Greek households.
• Pensions: extension of the retirement age
The Prime Minister did not want retirees to pay, by extending the contribution period, in order to be able to benefit from a pension. He even considered – he had announced it during the campaign – wanting to restore the 13th month for retirees earning less than 700 euros. He finally got Parliament to vote on the terms of an agreement which will weigh heavily on Greek pensioners: generalization of the lowering of the retirement age to 67 (the highest age in Europe), freezing of supplementary pensions until in 2021 and increase in health contributions. In addition, also by 2021, all early departure arrangements will be removed.
• Privatizations: infrastructure for sale
With his Finance Minister Yanis Varoufakis, who left the government in early July, Alexis Tsipras had planned a nationalization program in the event of “Grexit”. Finally, there will be no exit of Greece from the euro zone, but Alexis Tsipras made accept the idea of a wave of privatizations, whereas he had frozen them as soon as he came to power. Since then (to a German company, moreover…), which makes Greece a “good student” on this point: it has in fact just almost fulfilled these disposal targets for the year 2015 barely a month after the agreement concluded with European partners.
• Debt repayment: no moratorium
Alexis Tsipras’ position was clear during the campaign for the legislative elections: even if he was not opposed in principle to the repayment of the debt, he wanted to reduce its intensity. He even envisaged a “moratorium” on this debt, wanting to condition it on the return of growth. On Friday July 3, two days before the referendum, in a televised address, “a 30% haircut” on Greek debt and “a 20-year grace period” to ensure “debt sustainability” of his country. For the moment, the agreement does not provide for any reduction of the Greek debt, the Eurogroup having affirmed in the press release following the adoption of the aid plan that “the sustainability of the debt can be ensured thanks to a program of credible and comprehensive reforms and additional measures without nominal obliteration”. The debt still has a chance of being revised downwards in the coming months, despite fierce opposition from Germany, Athens can count on an unexpected ally: the IMF.
• Social measures: generous promises frozen
In addition to the significant reversals resulting from the agreement of July 13 and its passage before the Greek deputies, Alexis Tsipras has also never followed up on several emblematic measures announced during his electoral campaign: to offer electricity to 300,000 low-income households (he finally accepted the privatization of Admie, the main electricity operator), reduce the Greek minimum wage to 750 euros, its level before 2012 (the measure has been postponed) or ensure free access to healthcare (while levies finally increased) to name only the most significant measures. Even if Alexis Tsipras only spent seven months in power, and the ambitions of his program were substantial, it is therefore unlikely that these promises not yet fulfilled will ever be fulfilled… not to mention those already explicitly betrayed by the government. agreement with Brussels.