The Guardian — A goodwill gesture to ease the plight of those hardest hit by tax increases and budget cuts in Greece has backfired spectacularly on the prime minister, Alexis Tsipras, with the country’s international creditors making clear he has acted out of step.
In the starkest case yet of how closely watched loan-reliant Athens is, lenders reacted with unusual alacrity on Friday after the leftist leader announced a €617m one-off Christmas bonus for 1.6 million low-income pensioners, funded from the better than expected primary surplus achieved in the first seven months of 2016, which exceeded the target of 2.7 billion euros by 0.7 billion euro.
“The programme includes clear commitments to discuss all measures related to programme objectives with the institutions in advance,” an EU spokeswoman said. “The commission was not made aware of all the details of the announcements before they were made. We will now need to study them.”
Pensioners have been among those most affected by the gruelling regime of austerity the debt-stricken country has been forced to enact in exchange for over €300bn in emergency rescue funding over the last five years.
Under the scheme – announced in a televised address following a nationwide strike when anti-austerity demonstrations had swept the country – Tsipras said handouts of €617m would be given to those living on €800 or less a month.
In a move indicative of the tensions between Athens and its creditors, Bild, the popular German daily, poured scorn on the handout, saying: “Mr Tsipras has violated the agreements of the bailout programme.”
In recent weeks Greek-German ties have become increasingly strained, with Berlin’s powerful finance minister, Wolfgang Schäuble, reminding Athens repeatedly that Grexit would beckon if it did not stick to the rules, implement reforms and attain tough fiscal targets.
Germany’s insistence that thrice bailed-out Greece commits to a primary surplus of 3.5% for a 10-year period after its current bailout accord expires in 2018 has added to the pressure as it has become ever clearer that Athens will have to adopt more austerity.
Ignoring creditor anger, Tsipras’s beleaguered administration dug in its heels late on Friday, saying the bonus did not threaten fiscal targets and would not be rescinded. “It is up to the Greek government to distribute expenditure in the way it sees most fit and socially correct, as long as agreed goals are reached,” the prime minister’s office said. “Greece is not a colony.”
