January 27, 2015
Alexis Tsipras has been sworn in as the new prime minister and is to present his cabinet today, with Yanis Varoufakis set to become the next finance minister and Independent Greeks leader Panos Kammenos defence minister. Both Tsipras' choice of the Independent Greeks as a coalition partner and the first bills in the pipeline suggest a bold move against the troika and the terms of the bailout agreement.
The alliance with the Independent Greeks is also a risky strategy for Tsipras, writes Macropolis, as the party is rabidly critical of Greece's lenders and famously erratic. By opting for Kammenos as his coalition partner, the new Greek prime minister seems to be sending a message to lenders that he is not willing to compromise his position with regard to ending the bailout and securing debt relief. The risks are just too high for Tsipras, as he will have no one else to blame at home for any compromise he may have to strike with the EU lenders.
As for the coalition agreement, it was more straightforward than one would have thought. Sources told Kathimerini that the Independent Greeks agreed to back Syriza’s economic policies, as set out by Tsipras at the Thessaloniki International Fair in September, as long as the new prime minister does not forge ahead with changes in areas where Kammenos’s party has objections, including foreign policy issues and plans for a separation between the Church and state (Tsipras is the first prime minister to be been sworn in without a church ceremony).
Kammenos gave a green light for legislation already prepared. The first bill is to raise the minimum wage back to €751 and reintroduce regulations regarding collective wage bargaining, according to Kathimerini. The second draft law will focus on measures for taxpayers to be given better terms to repay overdue taxes and social security contributions. The bill foresees new payment plans, so that no more than 20%-30% of taxpayers’ annual income goes toward repaying their debts. The new government also wants to pass legislation that will end the mobility scheme and evaluation process in the civil service. This will lead to some people who have lost their jobs as a result of these measures being rehired. Other measures expected in the coming weeks are legislation that would allow some 300,000 households under the poverty threshold to receive free electricity. Tsipras is also due to push for the reopening of public broadcaster ERT, which was shut down in June 2013.
The latest data suggests that the primary surplus shrank by €1.7bn in December, according to Macropolis. The final figures for the whole year show that revenue (excluding tax refunds) fell short of target by €3.18bn, while expenditure was €769m better than target and the portfolio investment balance was €206m lower than expected. The revenue shortfall includes the €1.9bn income from SMP profits, which was not collected as the troika review was not concluded.
Again most of our coverage today is about events in Greece, and reactions. We also have some further details on QE, on regional elections in Spain, and shocking evidence that QE has caused hyperinflation in Germany within five days of the announcement.