The Greek government has submitted to Brussels its latest proposals for economic reforms to meet conditions for a new three-year bailout, late at night on Thursday July 10. The new plan (published in full at The Wall Street Journal) must be accepted by EU leaders on the following Saturday to ensure Greek banks do not run out of money, potentially forcing the country to drop out of the eurozone.
The plan is seen as a huge compromise on behalf of the Greek government, led by the left-wing Syriza. The deal they have proposed concedes to a number of measures put forward by the EU, which the party has been fiercely opposed to in its time in power. It also seems to go against the referendum result, in which the party campaigned for a successful “no” vote, much to the anger of European officials. This has led some commentators to question what the purpose of such grandstanding – which caused a run on Greek banks and forced Greece to institute capital controls – really was.
Five of the 10 economic reforms Greece has proposed to Brussels
1. VAT reform
2. Pension reform
3. Changes to public administration, justice and anti corruption
4. Amendments to the financial sector
5. Increased privatisation
One major sticking point in past negotiations between Greece and EU creditors has been the exemption of certain Greek islands from VAT. The latest proposal has agreed to begin abolishing these exemptions, starting with islands with the “highest incomes and which are the most popular tourist destinations.” Other climb downs include agreeing to raise the pension age to 67 as well as cutting supplementary pensions for the least well off.
Within the plan there was no mention of debt relief. The recently resigned finance minister Yanis Varoufakis had long been an advocate for such relief and often spoke of it as a requirement for any future deal. Varoufakis left shortly after the referendum, claiming that his presence at negotiations with creditors – with whom he became deeply unpopular – could hinder talks.
Prime Minister Alexis Tsipras is facing mounting opposition from within Syriza, which has a rather large base of support spanning from far left to centre left, over the contents of the plan. Many on the left of the party feel that the plan goes too far in compromising with creditors and betrays the principles upon which Syriza was elected and the July 5 referendum decision made.