Greece and the European Union Bailouts
On Tuesday, November 18th, 2014, Lefteris Papadimas published an article in Reuters entitled Greece at odds with EU/IMF lenders in ‘tough’ bailout review. In the article, Papadimas explains that Greece is currently in talks with the other European Union states, along with the International Monetary Fund with regards to negotiations with regards to the loan bailouts that were given to Greece. As part of the loan packages, the EU and IMF have placed a range of conditions that Greece is expected to meet. Many of these include significant reduction in state spending. However, according to the report, “The two sides are mainly at odds over the projected size of a budget gap for 2015, a senior Greek government official told Reuters. The lenders argue the government’s plan to let Greeks repay arrears to the state in 100 instalments would widen this gap, two government officials said. Athens agreed to remove a contentious real estate tax from the plan, but lenders are pressing for more changes, they said.”
According to some analysts and lenders, it is believed that ” that the 2015 fiscal gap will hit about 2.5 billion euros ($3.1 billion) unless the plan is changed, one of the government officials said. Athens, which is due to present its final budget in parliament this week, predicts a fiscal gap of less than 1 billion euros next year.”
This is a delicate situation, because, on the one hand, Greece greatly needed (and still needs) EU and IMF help. On the other hand, as Papadimas explains, the Prime Minister Antonis Samaras wants to move away from the bailout in order to help those domestically who have been affected by the austerity measures. In addition, it is also important to note that there is a Presidential vote in February of 2015, and that “the coalition government is walking a tightrope due to a presidential vote in February, which could trigger snap elections and bring the anti-bailout Syriza party to power.”
Thus, in this situation, one has to look at this from the perspective of various actors and interests. The EU wants their states to be economically stable. As does the IMF. And among these hopes, it seems that there are calls for reduced government involvement in the economy, particularly with regards to their budget imbalances. However, domestically, citizens affected by these policies are not happy, and could take it out on the political parties, who themselves are looking to maintain their seats in government.