Greece has no constitutional ‘Golden Rule’ or debt ‘break’/'cealing’. Hence, implementation of this provision is democratically and legally questionable.
1. No conclusion of 1st review. Additional actions requested:
- First package (assuming of many to follow) of additional 3% GDP cuts by 2018: again pensions, taxes, VAT, and further wage cuts for civil servants
- Contingency mechanism with obligatory measures, to be agreed with institutions, in case 3.5% GPD primary surplus not achieved in medium-term. Exceptions only by agreement with the institutions.
- Open the sales of Non-Performing Loans. Exception for first-residence mortgages that are “small” (what is defined as small??)
- New Greek Privatization and Investment Fund – legislate and make operations by September 2016, transferring a set of assets.
2. Debt relief: Possible with multiple measures phased-in, but to incentivize structural adjustment beyond 2018. No nominal haricuts. EuroWorkingGroup to elaborate further by the 24 May 2016 Eurogroup. Options include:
- Optimize debt management
- Specifics, such as longer payment/grace periods, SMP, etc
- Further measures at the end of the porgramme (2018), if necessary
3. IMF to participate (there was no other way – read Is the IMF necessary for the 3rd Greek Program?)
4. Bottom-line: An additional MoU in the coming days with prior actions and compliance, or no disbursement
B. The Democratic Concerns
This Eurogroup statement includes some democratically problematic elements. Three main concerns:
- Greece has no constitutional ‘Golden Rule’ or debt ‘break’/'cealing’. Hence, implementation of this provision is democratically and legally questionable. However, note that the Treaty on Stability, Coordination and Governance (TSCG, including the Fiscal Compact; Article 3) does provide for the adoption of such a mechanism by all participating States, which is equally democratically questionable, given the different constitutional or economic policy or democratic traditions of each State.
- Even in the case that this mechanism is to be introduced based on the aformentioned TSCG stipulation, aside from the proposal of the Commission provisioned in the TSCG, the other institutions involved in the Greek 3rd program (IMF, ECB, ESM) have no role in the setting of such mechanism, opposite what is provided in the above Statement. What is more, none of these four institutions may have such a direct effect in deciding exactly which precise measures are to be included in the mechanism on the basis of the TSCG.
- In any occasion, it is democratically problematic that there be future cuts legislated in the present regardless of elections or any other democratic process, solely based on a fiscal indicator. What if the government or conditions are different? Note, for example, the crises in relation to the USA debt ceiling, especially the one during September/October 2013.
- On the new Privatization Fund, it is to privatize Greek state assets while overseen by EU officials (!!!) and it firstly services bank recapitalization – read Greece’s 3rd MoU: a one-way street?
At the very least, and given the aformentioned observations, perhaps pause should be taken in order to reflect on the path and direction that democracy within the EU has taken.