April 28, 2015

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Don't be fooled. No change of substance in Greece.

There is lots of glee about Yanis Varoufakis' fall from grace, but make no mistake. The appointment of a new negotiating team has not changed anything of substance. What it will do is to speed up negotiations if there is more staff to help the technical team collecting its data. The appointment of Euclid Tsakalotos as the new negotiation coordinator may symbolise a new readiness to compromise, but there is no shift in the substantive position. 

Alexis Tsipras and his team can be expected to remain tough. Tsipras said in a TV interview that the negotiations continue because issues like pension cuts, mass layoffs and VAT hikes are still on the table, according to @MacroPolis_gr. Tsipras suggested that pension reform should be discussed as part of the discussion for a "medium-term programme." He says the government is resisting VAT hikes for islands, suggesting that the real issue is collecting it, not raising the rate. As for privatisation, the main disagreement is about how revenues are used and the government's majority stake. The only concession he hinted at is the property tax, saying that it might happen in 2016 - not this year as promised in the pre-election campaign, writes Nick Malkoutzis (@NickMalkoutzis). 

Tsipras said a referendum may be an option if he is forced to accept an agreement with lenders that's outside of the government's "red lines." The Greek constitution, however, does not permit referenda on budget issues, but Tsipras is confident that it would permit a referendum on the deal with the lenders. 

The new man in charge of the negotiating team is Euclid Tsakalotos, a longstanding member of Syriza holding political capital with left wing Syriza supporters. He is likely to have a better sense of what sort of compromise is feasible with the left faction of Syriza, writes Paul Mason. He is softer in style than Varoufakis and less erratic, but in substance very much representing the core of Syriza's policy agenda.

The overhaul also foresees Nikos Theoharakis, who has been leading talks with the Brussels Group, undertaking the drafting of a growth strategy as a basis of a new deal with creditors in June, Kathimerini reports. George Chouliarakis, considered close to the powerful deputy Prime Minister Yannis Dragasakis, will take over responsibility for talks with the Brussels group. There is also a new team to “better support” technical-level representatives of Greece’s creditors in their efforts to get official data from Greek ministries.

Whether Yanis Varoufakis is sidelined or not as speculated by the international press, in Greece he is still considered an asset. Tsipras said in the interview that the negative climate in the eurogroup against him is part of the negotiation game, where the person who opposes gets "deconstructed", Reuters reports.  

Tsipras said that since the Feb 20 agreement, there's been a struggle by lenders to go back on what was agreed. An internal memo seen by Paul Mason shows how the Greek side sees the problem. This is from the memo:

“There is no agreement on basic topics of the negotiation between the European Commission and the ECB on the one hand, and the IMF on the other. For that reason they plan to draft an internal document writing down their common points and differences. The document claims that the ECB is at odds with the European Commission over the framework of discussions – i.e. it [the ECB] wants the old bailout not the 20 February agreement as the basis; and it [the ECB] claims the European Commission is open to ending repossession of people’s homes..."

The new negotiating team met yesterday and agreed on aiming for a deal by early May and to draft a multi-bill with measures from Varoufakis' reform list that are likely to pass parliament. According to Greek Reporters the draft bill will address fiscal issues, tax administration, auctioning of TV frequencies, taxing TV ads, reforming the Civil Procedure Code, reforming the administration and other measures.

The funding crisis though is unlikely to get any better and time is short. The Greek government is €400m short for pension payments this month, according to Kathimerini. University directors and local authorities stall over the cash transfer to the Bank of Greece as ordered by the government's decree, Kathimerini reports. The secondary school teachers’ union lashed out against the government’s attempt to take the reserves of municipalities and regional authorities. It accused the government of “grabbing money” and “instead of providing relief for the working classes, it uses it to satisfy the needs of creditors.”

Regional governors indicated they will transfer cash reserves to the Bank of Greece, as an “urgent and temporary” measure, noting that Tsipras reassured them a measure will soon go to Parliament to reverse the decree. Greek mayors agreed not to transfer any cash reserves to the central bank until certain exemptions that they said Tsipras has agreed to have them voted through Parliament. A final decision is delayed until May 7 congress, according to MacroPolis.

Our other stories

Today we also have stories on the eurozone’s financial disintegration; how to mislead on the true costs of the Greek programme; how the euro is dividing the Czech government; on Minsk II; how the French President is positioning himself well for 2017; and whether Podemos is fizzling out.

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