Tense last-minute talks
Negotiations said to trip on labor contracts as Moody’s downgrades Greece again
As government officials and representatives of Greece’s foreign creditors sought to finalize details of the government’s midterm fiscal program and privatization plan late last night amid reports of fresh obstacles in negotiations, Moody’s rating agency struck an unexpected blow to the process by downgrading Greece yet again.
In a written statement issued by the Finance Ministry minutes after the agency’s decision went public, Greek irritation with the timing of the move was clear. “Moody’s decision to downgrade Greece comes as representatives of the EU, ECB and IMF are in Greece to evaluate the country’s economic program,” it said, referring to Greece’s creditors by their acronyms.
Citing an increased risk of Greece handling its debt problems without an eventual restructuring, Moody’s downgraded Greece to Caa1 from B1. The agency also referred to “highly uncertain” growth prospects and missed targets in budget reforms. The ministry said Moody’s decision “had been influenced by intense speculation in the media” and that it ignored the Greek government’s commitments to meet its fiscal target and to accelerate its privatization program.”
Meanwhile, sources told Kathimerini that talks in Athens between government officials and visiting envoys – originally due to be concluded by tomorrow – had stumbled on a dispute over collective labor contracts. Labor Minister Louka Katseli reportedly objected to the officials’ demand that employers who do not sign up to collective labor contracts should not be bound by their terms. Katseli is said to have the backing of Prime Minister George Papandreou on this issue.
One point on which the government and its creditors were said to see eye-to-eye was on an ambitious privatization program, agreeing to bring forward several sell-offs planned for 2012 to this year and launching those slated for 2014 and 2015 by the end of next year. The new plan reportedly foresees the state selling a 21 percent stake in Athens International Airport (currently 55 percent state-owned) as well as its entire 34 percent stake in Hellenic Postbank and 40 percent of its 74 percent stake in the Thessaloniki Water Supply and Sewerage Company (EYATH). The only privatization project actually under way is the sale of a further stake in OTE telecom.
Late yesterday, Papandreou’s office said the premier is to travel to Luxembourg tomorrow for talks with Prime Minister Jean-Claude Juncker, who is chairman of the Eurogroup council of European of finance ministers.