A meeting between Prime Minister Lucas Papademos and the leaders of the three parties that make up his coalition government has been moved from Saturday to Sunday, a few hours before the Greek premier is due to meet his European Union counterparts in Brussels. Papademos had been expected to meet PASOK’s George Papandreou, New Democracy’s Antonis Samaras and Popular Orthdox Rally (LAOS) chief Giorgos Karatzaferis on Saturday afternoon but the talks will now take place on Sunday. The timing of the meeting was changed due to the ongoing negotiations between the government and the troika over possible private sector wage reductions and other reforms. Papandreou was also due to meet with troika officials on Saturday. Meanwhile, talks are continuing between Greece and its bondholders over a debt restructuring program, known as PSI. Papademos was due to meet with banking representative Charles Dallara, the head of the Institute of International Finance (IIF), on Saturday. Papademos is also due to hold a meeting with his cabinet on Sunday as he seeks to get cross-party and full ministerial backing for the measures being demanded by Greece’s creditors in order for negotiations on a new bailout, worth at least 130 billion euros, to proceed.
However, the parties in his coalition have displayed various levels of disagreement with some of the reforms being proposed and it is not clear that Papademos will get the unequivocal support he is looking for. “I am going to go the Maximos Mansion for two negotiations,” said Karatzaferis on Saturday. “One with the troika and one with the other party leaders to see if we can lift the burden that lies ahead of us.” The high-level weekend talks come as leaked proposals by Germany to its eurozone partners suggest that a European commissioner should be appointed to oversee Greece’s budget, with the powers to intervene if necessary. The German document, which has been seen by Kathimerini English Edition, also suggests that Greece should commit to using state revenues to first pay its foreign debtors before spending the money on public expenditure. “This commitment has to be legally enshrined by the Greek Parliament,” the document says. “State revenues are to be used first and foremost for debt service, only any remaining revenue may be used to finance primary expenditure. This will reassure public and private creditors that the Hellenic Republic will honor its commitments after PSI and will positively influence market access.” The German paper goes on to suggest that if Greece does not receive one of its bailout instalments, it should not be able to default but should be obliged to cut primary expenditure.
“If a future tranche is not disbursed, Greece can not threaten its lenders with a default, but will instead have to accept further cuts in primary expenditures as the only possible consequence of any non-disbursement.” Controversially, the German proposal also calls for Greece giving up its sovereignty over fiscal policy. “Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time,” says the document. “A budget commissioner has to be appointed by the Eurogroup with the task of ensuring budgetary control.
He must have the power a) to implement a centralized reporting and surveillance system covering all major blocks of expenditure in the Greek budget, b) to veto decisions not in line with the budgetary targets set by the troika and c) will be tasked to ensure compliance with the above mentioned rule to prioritize debt service.” There has been no official response from the Greek government on the matter.