Over the course of the last few months, the Greek government has not once failed to surprise and bewilder us – take Thursday (July 9) night, for instance, and its rather unexpected turn of events:
Commendably, the government turned its proposals in on time (!!). When documents did arrive, however, they were, firstly, unsigned and secondly, about 80% identical to the text prepared by creditors two weeks prior. In fact, the similarities are so striking that even a primary school pupil could easily spot them.
Here’s a short analysis of both proposals:
In terms of reforms of the labour market, the finance sector and public administration, the proposals match last weeks’ word for word. Same could be said about privatisation, whereas changes to the product market are even more detailed than those outlined at the end of June.
The only amendment to the pension reform is that it is to come into effect from October of this year, rather than immediately. Instead of cutting defence spending by €400 million, the new plan proposes a €100 million cut this year, followed by a further €200 million in 2016.
Furthermore, only the most remote of the Greek islands would be allowed to keep their VAT privileges, while the rest would have to get used to higher rates in stages between October 2015 and the end of 2016.
Last but not least, Athens is willing to concede to its creditors’ demands for a budget surplus for the next four years.
Yet doubts still abound around the feasibility of this year’s numbers, especially when the drastic economic downturn of the last few weeks is taken into account. This is why the numbers in the Greek proposal are all in parentheses.
The only logical conclusion is that, less than a week after a referendum in which both the serving government and 61.31% of its electorate rejected the Troika’s conditions, we are witnessing a complete U-turn. And while withdrawing from the negotiating table two weeks ago was certainly irresponsible, the current package of essentially identical measures, set in a significantly more difficult economic context, is even worse. It is now clear that the aim of the bailout referendum was to cement Mr Tsirpas’ leadership; the question is, how much longer will the people of Greece continue to trust and allow him to play the leading role in this modern-day drama?