Greek austerity under scrutiny

From the Greek government's point of view, everything is going according to plan - maybe better. Early Sunday, the parliament in Athens passed an austerity budget for 2016, enshrining tax hikes and spending cuts worth billions. The forecast for Greece to return to growth after mid-2016 are good, Prime Minister Alexis Tsipras said during the budget debate. And Greece's major banks were even recapitalized with fewer government subsidies than initially planned.

Sunday's bad news appeared in the German weekly Welt am Sonntag, which reported that Greece was trailing far behind on enacting the austerity demanded by its international creditors, calling the country a ship with no captain. That provoked an unusually harsh response from the prime minister's press office: The "diehard and unrepentant enemies of Greece" continued to rely on "disinformation and speculation."

Not all Greeks were so defensive about the criticism from Germany. "The report, after all, hits the nail on the head," the political scientist Levteris Koussoulis said. "The country is indeed without leadership - in the sense that those in power are unwilling or incapable of coming up with concrete results, sticking to an obsolete attitude instead, and working first and foremost towards staying in power." On a "metaphorical level," it was also correct to suggest that no one was steering the boat, "because the leading crew is primarily interested in remaining on board, not really caring about where the ship is heading."

In Athens, however, many were less critical of the government. "Pressure and blackmail - the lenders know the game," read an editorial in the left-liberal EFSYN daily, which called the Welt report "Germany's Trojan Horse."

In a radio interview broadcast on Monday, Deputy Foreign Minister Dimitris Mardas said, "I don't even know what's behind it."

New austerity measures

Greece's creditors want to conduct a review of the country's progress on austerity measures that was originally scheduled for October. For internal political reasons, it was postponed again and again. Even so, one major obstacle was removed by the Greek government at the end of November, when it pushed parliament to narrowly approve a new austerity package, thereby freeing up 2 billion euros ($2.2 billion) in loans.

Further reforms could happen between now and Friday - including a controversial civil service wage cut and the politically undesirable privatization of a state-owned energy supplier. This could get Greece another billion in loans. In addition, officials expect to release a proposal for reworking the pension system by the end of January. Loans to Greece have recently been disbursed in increasingly smaller installments, and only in return for concrete and verifiable progress on austerity.

Prior to passing the most recent austerity package in November, lenders had already put pressure on Athens to solve open questions - successfully, it appeared. Political scientist Koussoulis said lenders were once again increasing the pressure, and Prime Minister Tsipras is looking for wiggle room. Indeed, the government has been forced to implement austerity in bits and pieces, he said, because at this point it cannot afford a new internal standoff or external rift with the eurozone.

"The government says openly that it does not agree with many reforms, thereby signaling that they won't be implemented," Koussoulis said. "I believe they're playing for time in order to assume control of state institutions. When the odds turn favorable, it will probably not shy away from a new confrontation - and even renounce a tranche of aid already agreed upon."

The Greek politicial analyst Tassos Pappas said the government would stand up to creditors if they insisted on cuts to minimum incomes in the pension revamp. "With respect to this issue, the lenders not only want to dictate the saving objective, but also the means which are necessary to reach that objective," he said. "For example, they reject an increase in employers' social contributions that has been proposed by the government."

To be able to introduce the remaining austerity measures, Tsipras had asked for a nonpartisan consensus for his economic course during the budget debate. Immediately, he received a number of rejections - after all, lawmakers argued, he had sabotaged a consensus at every opportunity when he was still opposition leader. In response to that reproach, Tsipras changed gears to "attack," which was primarily directed at the largest opposition party, the right-wing New Democracy: ND would be well-advised to get used to four strenuous years in the opposition, Tsipras said.

The prime minister's advice does not seem far-fetched. The once-powerful ND is in a rather deplorable state at the moment. After the election of a new party chairman was canceled at the end of November because of a computer glitch, interim leader Evangelos Meimarakis stepped down, only to have his political ally Yiannis Plakiotakis installed as successor. Currently, Meimarakis is eagerly working on his comeback - which at least three other ND party heavyweights are trying to prevent.