Here we go again. As we reported yesterday, Greece was due to present to the Troika "how to cut a massive 150,000 public sector jobs: a move which will result in an immediate surge in public unrest, and an exponential jump in strike activity.... Greece is locked in talks with international creditors in Athens about shrinking the government workforce by enough to keep bailout payments flowing. Identifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a 2.8 billion-euro ($3.6 billion) aid installment due this month. More than a week of talks on that has so far failed to clinch an agreement." Fast forward to today when we learn that any hopes a last minute solution would materialize, allowing the monetary spice to flow and the €2.4 billion loan to be paid, were just dashed following a breakdown in talks between Greece and the Troika. Deja vu all over again.
Troika representatives are due to leave Athens on Thursday with no final agreement having been reached with the coalition on a range of structural reforms but with the Greek side insisting that the pause in the talks will not lead to complications in the disbursal of its next loan tranche from the eurozone and International Monetary Fund.
Talks between Prime Minister Antonis Samaras and officials from the IMF, European Commission and European Central Bank lasted for a couple of hours on Wednesday night but there no conclusion was reached on matters including the reduction of civil servant numbers and a payment plan for firms and individuals who owe social security contributions.
Who can forget the perpetual Greek optimism, which spun every development, no matter how bad, as very good. For those who have, here is a reminder:
Despite the apparent impasse in the discussions, Finance Minister Yannis Stournaras insisted that the two sides were edging toward a deal and that Greece’s next loan tranche of 2.8 billion euros was not in danger.
“There has been significant progress in the talks with the troika,” Stournaras told journalists after leaving the talks at the Maximos Mansion, in which he also took part.
“The negotiations will continue when the troika representatives return. There is no issue with the loan tranche,” he added.
The finance minister indicated that the troika team would return to Athens at the end of the month or at the beginning of April, which means that Greece will not receive its bailout installment this month, as had been originally planned.
Stournaras said that just “technical issues” remained to be resolved between the two sides but the indications were that there are still substantial differences on a range of concerns.
Technical issues: such as justifying to some 150,000 public servants why they will have no job in under two years.
The minister did not specify which matters are still the subject of negotiations but over the past few days negotiations focused on civil service firings, the continuation of the emergency property tax introduced in 2011 and how to recover unpaid taxes and social security contributions.
This is eerily reminiscent of events from early 2012, when Greece was repeatedly "fixed", only for the EURUSD adrenaline to peak with the summer elections when Syriza almost received enough votes to renegotiate the very unpopular memorandum under whose auspices Greece has seen the youth unemployment percentage approach triple digits with every passing month. In the process peripheral bonds exploded leading to numerous Eurogroup and Finmin summits, leading up to the ECB's OMT, penned under Buba duress but at least arresting the complete collapse, if only briefly, in the sovereign bond market and the raging bank runs across the PIIGS.
It was also Greece that cratered the fragile 'recovery' that the US (and Europe) was undergoing in early 2012, not to mention 2011 and 2010.
It is only fitting for Greece to ruin the party for everyone once more.