Government sending mixed signals

29 December 2016
168 Views

Just a few days after Finance Minister Euclid Tsakalotos sent a letter to Greece’s creditors assuring them that the Christmas bonus to low-income pensioners was a one-off gesture, Minister of State Alekos Flambouraris told a private television channel on Wednesday that the government would not hesitate to grant a similar bonus next year if there is a surplus.

“We will try again next year to give to the weaker if there is a surplus,” he told Antenna.
His comments were a reflection of what analysts see as the government’s strategy to tell the creditors one story and its domestic audience another.

Moreover, the suspension of a value-added tax increase on the eastern Aegean islands – due to the pressure they have come under as a result of the migrant crisis – could, according to Alternate Defense Minister Dimitris Vitsas on Wednesday, extend to 2018, in stark contrast to the Tsakalotos letter, which said that the suspension would only be for 2017.

Speaking to Skai TV, Vitsas said that “if the refugee crisis continues, and in my opinion it unfortunately will in November and December 2017, then we will extend [the suspension of the VAT increase] to 2018.”

And to complicate matters further, ruling SYRIZA insisted in a statement on Wednesday that Tsakalotos’s letter not only doesn’t include any commitments to take new measures, but also “opens the way for similar ones in the future.”

Analysts believe the government’s narrative at home could also lead to early elections.
The argument is that the leftist-led government is seeking to pander to voters, in the event the road map it has set out doesn’t materialize – namely, according to government spokesman Dimitris Tzanakopoulos, the conclusion of the second review of Greece’s third bailout by the end of January and the country’s inclusion in the European Central Bank’s quantitative easing program within the first three months of 2017. This, Tzanakopoulos said, will pave the way for Greece to test the waters of international markets, which, in turn, would lead to the country’s exit from the memorandums it has agreed to by August 2018.

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