Bargaining on scheduled pension cuts kicks off

The issue of the pension cuts scheduled for January will dominate Wednesday’s meeting between the creditors’ mission chiefs and Finance Minister Euclid Tsakalotos in Athens, with senior officials stressing that the eurozone expects Athens to implement the fiscal commitments and the reforms it has pledged.

The chief representatives of the country’s creditors met on Tuesday with officials from opposition parties New Democracy, Movement for Change and To Potami. Sources say that their attitude showed they consider the reduction of pensions to be a fiscally neutral measure, because it will be offset by the so-called countermeasures, so that no pension cuts will mean no offsetting measures either.

Kathimerini understands that even the representative of the International Monetary Fund agreed that the measure will not have an impact on the budget, but did tell a party representative that the Fund considers the measure to have a structural character.

At the same time Prime Minister Alexis Tsipras said in an interview with Euronews, to be aired on Thursday, that if Athens meets its fiscal targets “we may avoid a measure that is needless as well as against growth and non-structural.” Asked what will happen if Greece fails to make its targets, Tsipras responded that Greece must find a way to meet them.

The meetings with the parties on Tuesday illustrated that the creditors are sticking to their position, and only the European Commission appears more flexible on the pensions issue, while the IMF is insisting on the significance of the measure for the social security system. In any case, no decisions are likely to be made before the submission of the final budget draft in November.

In an interview with Capital.gr on Tuesday European Stability Mechanism chief Klaus Regling reiterated that the fiscal package voted through by the Greek Parliament last year included the social security reform, saying that therefore this is part of the agreement. He pointed to the negotiations starting today with Tsakalotos on the issue, saying that “this is the proper framework for discussions to begin regarding the implementation of the commitments the Greek government has undertaken.”