Greece enacts pension handout despite Euro creditor warnings

‘Significant concerns on both process and substance’

ATHENS:

Greek lawmakers on Thursday approved a pension handout that has set the country on a collision course with hardline European creditors who accuse the struggling eurozone member of defiance. A total of 196 lawmakers out of 257 present from across the party divide approved the bill in a row that has also brought simmering EU disputes over austerity to the fore. The handout measure, announced by under-pressure leftist Greek Prime Minister Alexis Tsipras last week, earmarks 617 million euros ($656 million) for a one-off payment to low-tier pensioners.

Athens says the pension handout will come out of a one-billion-euro tax surplus, but European creditors on Thursday said the Greek move raised “significant concerns on both process and substance” regarding the country’s bailout obligations. In the joint statement, representatives from the European Central Bank, the European Commission and the European rescue fund said they would now decide whether to uphold a Eurogroup decision granting Greece short-term debt relief earlier this month.

Tsipras on Thursday said the situation had to be resolved “without blackmail” on the part of Greece’s creditors. “I believe that we can have a breakthrough without blackmail and with respect of the sovereignty of each country,” said the leftist leader, who fought with his European peers to within an inch of taking Greece out of the euro last year, as he arrived for an EU summit in Brussels.

France weighed into the debate with uncharacteristic force, led by President Francois Hollande who insisted that Greece be “treated with dignity” in the ongoing dispute. France has defended Greece against a hardening stance by Germany and Eurogroup head Jeroen Dijsellbloem. A spokesman for Dijsselbloem on Wednesday said the eurozone was suspending the recentlyannounced debt relief scheme for Athens in retaliation at not being fully briefed on Tsipras’s handout planswhich also include a lower sales tax for Greek islands tackling migration.

“The institutions have concluded that the actions of the Greek government appear to not be in line with our agreements,” said the spokesman for Dijsselbloem, who heads the 19-nation eurozone, which oversees Greece’s massive 86-billion euro bailout. The dispute escalated within hours, with both French Finance Minister Michel Sapin and European economic affairs commissioner Pierre Moscovici-himself a former French finance minister-publicly distancing themselves from the Eurogroup decision. “Individual statements are not the collective statements of the Eurogroup,” said Sapin, noting the decision had not been taken unanimously by the 19-member club.

Diverging views

The spat has brought to the fore the widely diverging views in Berlin and Paris on the merits of long-term austerity. France has traditionally taken a far softer line on Greece than Germany during the years of negotiations over Athens’ crippling debt and need for bailout funds. Tsipras, who has his own troubles at home with his ratings in decline, has taken a stand on the principle of national sovereignty.

“We are not a colony,” his government spokesman said last week, when the handouts were first announced. And Tsipras himself on Wednesday said the creditors had to “respect the Greek people, who have made major sacrifices these past seven years in Europe’s name”. Ironically, Greek pensioner associations have rejected the one-off handout-worth at least 300 euros per person-as “peanuts”. — AFP