Saturday, March 21, 2015

European Commission vetoes Greek government's humanitarian crisis bill

The European Commission has vetoed what the government calls a "humanitarian crisis bill." The bill was meant to address poverty among pensioners and homeless families.
The bill said:
"The deep recession due to austerity policies and the economic crisis in the past six years had a dramatic social impact. This draft law aims at tackling the humanitarian crisis through measures which ensure access to basic goods."
Free electricity and food would be provided to some poorer households under the legislation. The Commission sent the notice just 24 hours before the bill was to go before the Greek parliament. Another bill that would have allowed tax arrears to be paid in installments was also vetoed. Of course the Greek parliament can still pass the bills, but if they do they can forget about more funds being released under the extension of the bailout program. The agreement with Greek creditors is that no policy that might impact the financial objectives that are part of the extension deal would be passed unilaterally, that is without the agreement of the creditors. I might add, that includes the Troika of the European Commission, IMF, and European Central Bank now called "the institutions."
According to a communication seen by Channel 4 News, Declan Costello, director of the EC's directorate for economic and financial affairs, ordered the Syriza government to kill the legislation. Costello's letter said:During our teleconference last night, you mentioned the planned parliament passage tomorrow of the ‘humanitarian crisis’ bill. We also understand that other policy initiatives, including the installment scheme law, are in train that are to go to parliament shortly.We would strongly urge having the proper policy consultations first, including consistency with reform efforts. There are several issues to be discussed and we need to do them as a coherent and comprehensive package. Doing otherwise would be proceeding unilaterally and in a piecemeal manner that is inconsistent with the commitments made, including to the Eurogroup as stated in the February 20 communiqué.”
In effect, the letter states that if the Greek government goes ahead with this legislation it will be in violation of the deal Greek Finance Minister Varoufakis signed on February 20. It should be clear that Greece simply cannot expect to pass its reform program as promised to the voters, but only such reforms as its creditors agree can be presented. The Syriza government has been carrying on with rhetoric that has no relationship to reality. There is no new deal that avoids the strictures of the Troika. It is the same deal with the Troika now called "the institutions." Legislating reforms that might use funds that could be sent to pay off loans will not be allowed, unless the debtors also agree. The Greek government thinks that it can assure creditors that the new measures will not burden the budget, but obviously the Commission does not see it that way.
Syriza MP and economist Costas Lapavistas in a joint interview with the German paper Der Tagesspiegel and The Press Project International said that Greece and its EU creditors were "flogging a dead horse" by trying to keep the bailout deal going. He suggests that the two sides should be working on "an exit that will be negotiated and consensual." Lapavistas points out that in 2011, the German Finance minister Schauble was in favour of a negotiated exit. A majority of Germans now also want to see Greece exit the euro zone:A poll by German broadcaster ZDF found that 52% of Germans think Greece should leave the eurozone, and only 40% think it should stay. In February, the figures were reversed — with a 52% majority wanting Greece to stay.
Even the business news outlet Bloomberg has an article by Mark Gilbert saying that a Greek exit from the Eurozone seems inevitable.


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