Threat of more austerity looms

Athens fears IMF and Berlin will reach deal for further measures as Euro officials call for debt relief

With the government banking on securing a “political decision” at Monday’s Eurogroup – as the conclusion of the bailout review is now seemingly out of reach – the prospect of further austerity as demanded by the International Monetary Fund remains the biggest thorn in its side.

Indeed, Athens’s biggest fear is that the IMF and Berlin will strike a deal demanding more measures as highlighted in comments by Finance Minister Euclid Tsakalotos yesterday that the government cannot accept “compromise deals made between the IMF and the European countries on the back of Greece.”

Tsakalotos criticized the IMF for pressuring Greece to implement more measures while failing to urge European countries to grant the country debt relief, and aimed fire at the eurozone for agreeing to discuss labor measures that stray beyond accepted European principles.

Referring to the labor regulation demands, he said: “Those institutions should not consider a country that is in a [bailout] program to have lesser rights. I think it’s not right, not morally right,” while government aides yesterday said the review would have already been concluded had it not been for the IMF’s demand for more measures in exchange for its participation in the bailout.

However, Athens’s case for debt relief received a boost yesterday after senior European officials said a solution was overdue. European Central Bank executive board member Benoit Coeure, who was in Athens yesterday, said the ECB was “looking forward to a solution” and “all stakeholders in the Greek adjustment program must realize that there are serious concerns about the sustainability of the Greek public debt.” ECB chief Mario Draghi, for his part, said yesterday that a solution to the Greek debt issue would be in the interest of the eurozone.

Prime Minister Alexis Tsipras, who also met with EU Finance Commissioner Pierre Moscovici yesterday, said it was time for “brave decisions” by all parties involved, while the French official insisted that “we must definitely begin discussions on the debt.”

According to sources, Tsipras told Moscovici Athens will not accept any deal on labor laws that does not include the return of collective bargaining. For his part, Moscovici said the Commission cannot agree to a solution that does not adhere to the European social model.