Athens, February 2, 2016/Independent Balkan News Agency
By Zacharias Petrou
The second day of talks between the Greek government and the country’s creditors as part of the first bailout program review which focused on social security reform ended without much agreement.
The top officials representing Greece’s quadriga of creditors reportedly turned down the proposal of Greek Labor minister Giorgos Katrougalos to increase social security contributions.
After a three-hour meeting with the quadriga, in which Finance Minister Eu. Tsakalotos and Economy minister G. Stathakis took part too, creditors rejected the plan to increase contributions by 1.5% which means the government must find 500 million euros from a different source or by cutting pensions.
Labor ministry sources said the rejection was “expected” and that the negotiation was “tough but in a productive climate”. Talks on social security reform will continue on Wednesday.
According to the Greek media, creditors made their tough demands known from early on in the meeting, expressing their objections to the government’s plan immediately.
Besides rejecting the idea of increasing social security contributions (both for employees and employers) the creditors also reportedly pushed for further pension cuts, smaller pension replacement rates and income criteria to apply for national pensions.
Government sources told reporters that creditors were tough but “at least they didn’t demand pension cuts in the first meeting”.
“It is a very tough negotiation that will continue tomorrow” stated Labor Minister G. Katrougalos after his meeting with the heads of the institutions at Athens Hilton hotel.
Katrougalos noted that “the meeting was held in a climate of constructive discussion” adding that “the issues are the already known issues that are always set by the institutions. I believe that this tough negotiation will continue and that the final outcome will be in the country’s interest”.
Besides the thorny issue of pension reform, the agenda of talks includes examining the fiscal gap and a tax overhaul. The envoys are expected to stay in Athens until Friday before taking a brief break, allowing the negotiations to continue at the technical level, with their return scheduled for February 15.
Meanwhile, as talks continued in Athens, More tractors were joining the blockades by farmers nationwide as they escalate their mobilizations ahead of Thursday’s general strike against the government’s social security reform plan.
Key national highway points were closed off even as farmer unions show no sign of agreeing to negotiate with the government if the entire plan on pension reforms affecting farmers is not withdrawn.
During a briefing session for journalists, government spokeswoman Olga Gerovasili called farmers to isolate those who don’t wish to negotiate the social security reform plan with the government. “Our position is dialogue, dialogue, dialogue” she said.
“We have the August agreement which is not very pleasant […] we understand the problems farmers face but the government is working on a plan to support them” Gerovasili said.
Referring to negotiations with creditors, Ms. Gerovasili said the government wishes to see the review concluded swiftly in order for debt talks to begin.
She said that Greek proposals adhere to the agreement with creditors fully and that negotiations with creditors are at a preliminary stage. “An entire framework has been agreed” said Gerovasili, explaining that the first round of talks will be wrapped up on Friday. Talks will cease for one weak and restart the following week. “Our aim is for negotiations to be finished by then end of February so we can wrap up the review by March” Gerovasili said.
The government spokeswoman also denied there was any chance of an early general election, despite rumors being circulated in parts of the press suggesting Prime Minister Alexis Tsipras could consider the option. Certain reports mention aides of the Prime Minister and top ministers are “flirting” with the idea of early elections if the government is called – under the pressure of the IMF – to adopt harsher measures than those outlined in its social security reform plan, and at the same time if consensus is not struck at political or social level over the need to push through reforms.