Exclusive: Greece has three days to deliver or face consequences - EU officials

(Reuters) - Greece has three days to reassure Europe and the IMF that it can deliver on conditions attached to its bailout in order to receive its next tranche of aid, four euro zone officials said on Tuesday.

Greek Prime Minister Antonis Samaras addressed his country early on Friday morning to update Greeks on the crisis that befell his coalition this week.

The government of Prime Minister Antonis Samaras lost a coalition partner on Friday after a week of late night negotiations over the future of state broadcaster ERT. Samaras is left with but a razor-thin majority in parliament, threatening his reform drive.

 

Last June, Antonis Samaras was sworn in as Greek prime minister, the head of a three-party coalition tasked with knitting together a divided society and repairing his country's broken economy. Now, exactly one year later, that coalition officially belongs to the past. On Friday, the Democratic Left said it was withdrawing its ministers from the cabinet and would only provide qualified support to the government from here on out.

The announcement was made by Democratic Left leader Fotis Kouvelis. He said he was left with little choice following the government's abrupt closure last week of the state broadcaster ERT. The departure of the Democratic Left means that Samaras will now be forced to govern with an extremely narrow majority in the 300-member parliament. His conservative New Democracy party has 125 delegates who are joined by their 28 socialist coalition partners from PASOK. The government can also count on the support of some independent deputies.
As such, the catastrophic scenario of snap elections during the crucial summer tourism season -- which had seemed almost inevitable last week -- has been avoided. In a televised statement late on Thursday night, Samaras insisted his government would serve its full four-year term. "Our aim is to conclude our effort to save the country," he said.
Pressure to avoid new elections in Greece had been high, both from within and without. Indeed, that pressure played a major role in an emergency coalition meeting on Monday night which ended with the three-party coalition still intact. Kouvelis' sudden change of heart on Friday did nothing to lessen the desire to avoid snap elections.
'No Time for Elections'
Ioannis Michelakis, a senior New Democracy parliamentarian and a close advisor to Samaras, told SPIEGEL ONLINE that the Greek people did not want a new vote and that his party, together with PASOK, was merely respecting that wish.
"The government of Mr. Samaras has saved Greece from bankruptcy and a catastrophic exit from the euro, has rebuilt the nation's credibility with its European partners and there are signs that 2014 will be the year that Greece will start recovering. This was no time for elections," he added.
In addition, the parties themselves had little to gain from a new vote, particularly PASOK. The leftist party has dominated Greek politics for much of the last two decades, but it is currently polling around 6 percent, having lost massive support due to its association with the Greek debt crisis.
A PASOK parliamentarian, who wished to remain anonymous, explained his party's decision to stay in the Samaras government by saying: "We will either thrive together (with New Democracy) if the government succeeds, or be annihilated together if we fail."
But Athens had also received clear messages from European capitals and the International Monetary Fund that any electoral adventure now could jeopardize further funding. The IMF warned on Thursday that the regularly scheduled inspection of Greece by its creditors, which was suspended earlier this week in consideration of political developments, needs to be completed by the end of July as planned if the country is to avoid any funding disruptions.
Blessing in Disguise?
Still, there are worries among the troika -- made up of the European Union, the European Central Bank and the IMF -- that the nation is entering a new phase of political instability. That, they fear, could slow the pace of reform and weaken adherence to the austerity measures which Athens agreed to as a precondition for funding.
There is, however, a possibility that the opposite might prove true. New Democracy parliamentarians told SPIEGEL ONLINE that the Democratic Left's departure could prove a blessing in disguise. They say that Samaras can now reshuffle his cabinet and appoint pro-reform ministers who will "get the job done."
The Democratic Left held two ministerial posts in the Samaras government. One, Antonis Manitakis, had been in charge of the sensitive Interior Ministry, responsible for overseeing the layoff of a total of 4,000 public servants by the end of the year. Greece's creditors have often expressed dismay at the slow pace of the implementation of the measure by Manitakis, a law professor who publicly resisted the idea of public sector layoffs.
Samaras is expected to proceed with a cabinet reshuffle immediately. His new government will include more PASOK members, perhaps even party leader Evangelos Venizelos as deputy prime minister. The two leaders were expected to meet on Friday afternoon to discuss the way forward. Samaras has been advised to then ask for a parliamentary vote of confidence in parliament, which could reinforce the stability of his government. Other advisers, SPIEGEL ONLINE has learned, have said that this is not necessary and that the parliament's vote on the bill establishing the new state broadcaster will be tantamount to a vote of confidence.
'Fundamentally an Issue of Democracy'
The Greek government fell into disarray when Samaras unilaterally decided to shut down ERT and fire its entire staff of 2,700 to prove to his domestic and foreign audiences that his reform drive remains strong. By not consulting with his partners, however, he provoked an outcry among his allies and Greek trade unions and in European capitals. A court ruling, yet to be implemented, has ordered the government to immediately resume public broadcasting. The three coalition leaders met three times over the past week to overcome the stalemate.
Last night, Samaras and Venizelos finally agreed on a plan to hire back 2,000 ERT staffers with 3-month contracts, who will operate the broadcaster until the new, slimmed-down version is in place.

But Kouvelis of the Democratic Left rejected the plan and insisted on the immediate reopening of ERT as it was. He said the reopening of the broadcaster was "fundamentally an issue of democracy." ERT reporters told SPIEGEL ONLINE that they too are planning on resisting the Samaras plan to hire some of them back on temporary contracts and insist that it reopen as it was before it was suddenly taken of the airwaves. Bootleg ERT programming continues over the Internet.
Analysts agree that the ERT issue was simply the straw that broke the camel's back and that sooner or later the Democratic Left party would have backed out of the coalition anyway. Otherwise, it risked being destroyed by the new wave of austerity measures and unpopular reforms Greece will have to swallow in the months ahead.

Source: spiegel.de