GREECE - Government Blinks on Bailout

"Greek government blinks with new bailout proposal" PBS NewsHour 7/10/2015

Excerpt

SUMMARY:  Greek Prime Minister Alexis Tsipras is now offering concessions to creditors, such as a higher sales tax and pension changes, in hopes of winning a new bailout worth nearly $60 billion.  Jonathan Rugman of Independent Television News reports on the response to the controversial package in Greece.

JUDY WOODRUFF (NewsHour):  Now, the drama in Greece heading toward a climax at a Sunday summit of European leaders.

The Greek prime minister has now offered concessions to creditors, ranging from a higher sales tax, the so-called VAT — VAT — to pension changes.  The goal?  A new bailout worth nearly $60 billion.

Jonathan Rugman of Independent Television News reports.

JONATHAN RUGMAN, Independent Television News:  Climbing the steps of Greece’s Parliament today, the members of a government forced into a last-minute climb down.  Days ago, they were railing against Greece’s creditors.  Today, they were talking up the chances of a new deal with them this weekend.

OLGA GEROVASILI, Greek Parliament Member (through interpreter):  I am certain we will reach an agreement.  There was never any doubt.  The battle was lengthy and long and will reach its conclusion by taking the steps you already know about.

JONATHAN RUGMAN:  And greeted like a conquering hero, Alexis Tsipras, the prime minister, who is now pushing through Parliament the kind of austerity 61 percent of Greek voters rejected last weekend, because money or lack of it talks.

These banks could be bankrupt by Monday, and so the government, it seems, has blinked.  Greece’s proposals are on time and to the kind of budget a wary Eurozone might accept, giving into more austerity, with a standard VAT rate at 23 percent beginning in October, reducing the 30 percent VAT tax break applied to tourism-rich Greek islands, corporation tax rising from 26 percent to 28 percent, as Greece’s creditors demanded, and raising the standard retirement age to 67 over the next seven years.

But what is Mr. Tsipras hoping to win in return?  Well, 53.5 billion euros in loans over three years and, crucially, restructuring the repayment of Greece’s vast debt, though the 13 billion euros in tax rises and spending cuts is at least four billion euros more than the package Greeks on Sunday voted against.

A new and lasting deal with Greece will depend on the Greeks actually doing what they say they will and not buckling under the weight of more austerity.  And Germany will need to agree on some form of debt relief which doesn’t leave German taxpayers feeling shortchanged.  But whatever the outcome of this weekend’s talks, Greece is heading for years of economic hardship and the debate over its Eurozone membership is very unlikely to stop.