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Inside Story
Renegotiating the Greek bailout
As a new pro-euro coalition takes shape in Greece, we ask if the terms of its bailout should be changed.
Last Modified: 20 Jun 2012 07:53

The winner of Sunday's elections in Greece, the centre-right New Democracy Party, is holding discussions in an attempt to form a pro-euro government.

"The term renegotiation implies that it has to pass 16 parliaments because it has to be ratified. I would rather suggest we talk about adjustments…if you give Spain another timeframe to pay back their bailout you can't treat Greece in another manner."

- Jorgo Chatzimarkakis, a German member of the European parliament

The new government's first priority would be the bailout agreement reached with the EU and the International Monetary Fund (IMF), which all Greek political parties want to renegotiate in some form.

Following the outcome of the Greek elections, Guido Westerwelle, the German foreign minister, said: "The result of the Greece elections is that there are no concessions because what has been agreed is now what we will implement."

The latest austerity measures were the condition for a $170bn eurozone bailout. Now, this is what the EU wants from Greece in return: An estimated 150,000 jobs slashed from the state sector by 2015, of which 15,000 should be cut by the end of this year; the minimum wage lowered by 20 per cent, from $978 a month to $781; pension cuts worth $390m this year; the liberalisation of labour laws; and privatisations worth $19.5bn by 2015, including Greek gas companies.

"The Greek economy cannot take any more austerity and the new coalition more or less will fail if it does not pursue a real readjustment of the [terms of the bailout]."

- George Stathakis, an MP for Greek opposition party Syriza

The Greek economy makes up about two per cent of the EU's gross domestic product.

However, any amendment to the terms of Greece's bailout will need the backing of Germany.

Inside Story asks: Will the incoming Greek prime minister be able to impose new terms to the bailout deal and, if so, how?

Joining presenter Divya Gopalan to discuss these issues are guests: Dimitrios Tsomocos, an adviser to the New Democracy Party and an economics fellow at Oxford University; George Stathakis, a member of parliament for the opposition party Syriza; and Jorgo Chatzimarkakis, a German member of the European parliament for the Alliance of Liberals and Democrats for Europe.

"The main plan of the new government would be to renegotiate the memorandum and to supplement it with more growth measures .... Nowadays after the Spanish crisis erupted there is a growing consensus in Europe to emphasise growth more rather than austerity."

Dimitrios Tsomocos, an adviser to the New Democracy Party

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Source:
Al Jazeera
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