New bailout, new austerity program – how long can Greeks go on?

The 3rd bailout is on its way amidst imposition of inhuman austerity measures

By Pam Barker | TLB staff writer

In a report published here a week ago, it was officially confirmed by a study from the Berlin-based European School of Management and Technology that the bailouts given to Greece by the troika up to the middle of last year were basically massive sums of money taken from European taxpayers to bailout European banks. The troika comprises the IMF, the European Central Bank and the European Commission, the three globalist, largely Washingon-directed institutions.  The poor Greeks, through their government coffers, meanwhile got a mere 5% of the first loan and nothing of the other. That in addition to demands to restructure their salaries, pensions and public services along harsh neoliberal lines branded ‘austerity’.

Now the next round of tax-payer funded, save-the-banks bailouts totaling 86 billion euros that was agreed to last July are being imposed on the Greek people with a new set of strictures designed only to inflict more pain and hardship.  That in addition to being loaned money at the IMF’s behest in order to hide the fact that Greece can’t pay anything back due to being insolvent.

Greek lawmakers voted by a slim margin for the new round of loans this past Sunday night – 153 out of 300 – amidst large public protests on the streets of Athens and Thessaloniki that started well before the vote. The demonstration by an estimated 18,000 people in Athens alone turned violent when protestors started lobbing flares, stones and Molotov cocktails at police, who responded with tear gas and flashbangs. The protest formed part of a three-day general strike involving public transport, the ferry service and media outlets against the new measures imposed against the Greek government.

The next step following Sunday’s vote was a review of Greek’s situation to date by Eurozone finance ministers which took place on Monday, and reports coming from that were positive according to the particiants, although another meeting is due to take place on May 24.

According to a follow-up report by the European Council and the Council of the European Union on how Greece is adjusting macroeconomically, the policy reforms due to be implemented involve the pension system, income tax and VAT, public sector wages, a privatisation strategy, and ‘the issue of non-performing loans’.


Last Sunday night, May 8, outside the Greek parliament buildings

This all sounds comfortably abstract. RT provides some specifics:

The legislation presupposes comprehensive cuts in funding to Greece’s social security system estimated at €5.4 billion. In addition, citizens will be subject to a range of new taxes, such those on coffee and electronic cigarettes. The VAT on fuel will increase by a staggering 24 percent.

Greek citizens will already be feeling the burden of the newly-adopted fiscal measures this summer, as the five percent tax on broadband internet and ten percent on paid television are scheduled to kick in in July. Starting from January of next year, the consumption tax on coffee and electronic cigarettes will be enforced, along with a tax on tourists staying in hotels from 2 stars and up.

An article in DW gives an excellent albeit technical summary of what the austerity reforms mean in terms of pension restructuring, etc., which I recommend. Overall, the reforms will see a recalculation of pensions, a reduction in monthly pension payments and the phasing out of any kind of supplementary pensions. Monthly pensions will thus be fixed at 384 euros or roughly $437 per month. Further, any kind of early retirement will be prohibited.  One wonders how anyone can live on 384 euros per month.

Social security contributions will go up to 20% of an employee’s income,13.3% being paid by the employer with the remainder being picked up by the employee.

Ordinary Greeks will pay more taxes, whereby the salary threshold for paying any tax at all will go down. The lowest income tax bracket will be adjusted so that people earning 20,000 euros per year will pay 22% in tax as opposed to 25,000 euros. People at the ‘highest’ salary bracket at 40,000 euros will be taxed at 45% &etc.

The reaction from the Iskra website, which reflects the views of hardliners of Prime Minister Alex Tsipras’ party, Syriza, sees the bailout as a humiliating surrender of national sovereignty as well as a form of social enslavement to the troika and Germany.  Tsipras is long regarded as having completely surrendered to the demands of the troika despite being voted into power to oppose them.


Greek PM, Alex Tsipras

Yanis Varoufakis, Greece’s former finance minister under Tsipras, gave a humanistic as well as practical perspective on what this means in an April blog. And there is another way, he argues:

The IMF’s austerity package is inhuman because it will destroy hundreds of thousands of small businesses, defund society’s weakest, and turbocharge the humanitarian crisis. And it is unnecessary because meaningful growth is much more likely to return to Greece under our policy proposals to end austerity, target the oligarchy, and reform public administration (rather than attacking, again, the weak).

Further, on the IMF, which reports directly to Washington, he notes,

For decades, whenever the IMF “visited” a struggling country, it promoted “reforms” that led to the demolition of small businesses and the proletarisation of middle-class professionals. Abandoning the template in Greece would be to confess to the possibility that decades of anti-social programs imposed globally might have been inhuman and unnecessary.

As inhuman as the IMF’s position is, however, Germany as representative of certain member states in the European camp had not wanted to give debt relief in this round of bailouts. Germany’s finance minister, Wolfgang Schauble had initially opposed it, to which the IMF had responded by threatening to pull out. Germany’s vice-chancellor and economy minister, Sigmar Gabriel showed unexpected support for the bailout package in Monday’s meeting arguing that debt relief was basically unavoidable.

The next meeting will take place on May 24.











About the author

TLB image Pam

Pam Barker is a TLB staff writer/analyst based in France. She has an extensive background in the educational systems of several countries at the college and university level as a teacher and administrator.

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