Greece’s anti-austerity measures incur creditors’ wrath

Athens, Greece – Greece’s left-wing government announced its first counter-austerity measures in more than a year, only to incur the wrath of creditors and beneficiaries.

Prime Minister Alexis Tsipras was hard at work convincing his eurozone partners at Wednesday’s European Union summit that his measures are affordable.

They are now his biggest creditors, owning $220bn of Greek debt, and said on Tuesday that they were suspending debt relief worth $47bn until Greece assures them it is toeing the line on agreed spending limits.

Meanwhile, in the capital Athens pensioners were furious that the government’s planned handout to them is a relatively small amount – Tsipras said he will spend $650m on 1.6 million pensioners earning under $30 a day.

READ MORE: Analysis – Inside Greece’s bailout talks

With pensions cut by between 20 and 50 percent since austerity began in 2010, most of them earn less than the poverty level of $23 a day.

“I worked in construction for 42 years. I built Athens. It was a ruin after the Germans and the Civil War,” said Thanos Tzobanos, who travelled from Karditsa, in northern Greece, to be at the pensioners’ rally.

“We thought we were building a better world. Our reward is to go to hospital to die instead of having a reward of the sweat we put in for our children and grandchildren.”

With official unemployment still running at 22.6 percent, some studies find that about half of all households rely in whole or in part on income from pensions. Tzobanos’ pension was cut from $35 a day to $20 – an amount he shares with an unemployed son.

Despite the objections, parliament approved the handout by a two-thirds majority – far greater than the 153-seat government majority in the 300-seat chamber.

The package also includes delaying an income tax hike on eastern Aegean islands, which have borne the brunt of the crisis.

The government says its handouts do not cost more than $750m and it can afford them because tax revenues this year are more than $4bn above the target.

That puts Greece in line to achieve a primary surplus of $7.8bn, far above the targeted $3.6bn. The government sees this handout – along with 2,500 new jobs in health and education on the islands – as a much-needed stimulus to the economy. 

On December 5, the eurozone lengthened Greece’s repayment on some of its debt and adjusted its interest.

The measures fall far short of a 50 percent debt restructuring recommended by the IMF, but they would achieve an estimated 20 percent reduction of Greece’s debt burden by 2060.

All this has now been suspended pending a review of the latest measures.