Greece's opposition lawmakers angry after the EU describes its debt commitments as 'not rigid'
- Comments made by Pierre Moscovici, the European commissioner for economic affairs, were not well received.
- The future of Greece after its third bailout program ends is becoming more contentious by the day.
- Not only because the exit date, August 20, is fast-approaching, but because there is a general election due some time before October 2019.
Greece's opposition party, New Democracy, is angry after the European Commission made comments that its leaders believe could potentially help the current government in an upcoming general election.
It is a critical time for Greece, given that it is set to end its third bailout program in August. The future of the country after the program ends is becoming a more contentious issue by the day — not only because the exit date, August 20, is fast-approaching, but mostly because there is an election due at some point before October 2019 and the coming months will be critical to attract voters.
Thus, comments Tuesday from Pierre Moscovici, the European commissioner for economic affairs, that "commitments must be honored but they are not rigid" were not well received by the Greek opposition. His remarks referred to planned pension cuts due next January and suggested that the Syriza party government could potentially soften them, even though these measures have already been legislated.
Such a message could be seen as supportive for Prime Minister Alexis Tsipras as he can then argue that the third bailout was a success — unlike previous ones — and that he is now in a position where his government can even reverse some of the austerity cuts.
“In just six months from now, Greek pensioners and taxpayers will pay a 5.1 billion euro ($5.9 billion) bill that the Syriza government has agreed to with Commissioner Moscovici and our creditors. On top of 14.5 billion euros in austerity measures already signed and delivered (by the Greek government),” a source close to opposition leader Kyriakos Mitsotakis, who didn’t want to be named, told CNBC via email.
“If this was not enough, primary surplus targets of 3.5 percent of GDP until 2022 and 2.2 percent on average until 2060, as well as quarterly reviews of the Greek economy — (this is) exceptionally heavy supervision! This is clearly not a clean exit, no matter what you call it,” the source said.
The view from within the center-right New Democracy party is that Greece will still be under the supervision of European creditors and will be forced to comply with established financial commitments.
Greece promised European creditors that it would reach certain financial targets including a primary budget surplus of 3.5 percent in the next 4 years and of 2.2 percent in the 37 years after that. If Greece doesn't achieve these goals then some of the debt relief it received under the bailout program might no longer materialize in the future.
Speaking in parliament Thursday, Tsipras said the center-right leader Mitsotakis was only upset with Moscovici’s omments because there was no fourth bailout program that could damage the government’s reputation.
The head of the euro zone’s emergency bailout fund, Klaus Regling, warned that markets and investors will be watching Greece closely, and any deviations from the policies that Athens has committed to might bring about further financial problems.
“Greece has committed itself to continue on a reform path. Otherwise, some of the recently approved debt relief measures could be rendered useless,” Regling said told German newspaper Handelsblatt.