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Brussels dismisses the Troika to Greece

05 August 2014 / 15:08:26  GRReporter
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Brussels is considering dismissing the supervisory Troika to Greece and replacing it with a task force that would carry out biannual inspections. In return, Greece must make a commitment to the implementation of a six-year reform programme, under which the achievement of the objectives would be rewarded with measures to alleviate the debt, as reported by Reuters.

In particular, according to the agency that refers to European officials in Brussels, the possibility of dismissing the Troika is under consideration in order for the Greek government to be allowed to proceed with the implementation of that plan which it perceives as most appropriate in terms of giving impetus to the national economy.

According to the exclusive report by Reuters, the discussions are still at an early stage and they will gather pace when Greece and its euro zone partners draw the new direction of development of the country, which will be applied after the completion of the second bailout programme at the end of 2014.

The dismissal of the Troika that some compare with the Nazi occupation in Greece would probably be the key point of the new plan for Athens.

As indicated by the news agency, after Ireland and Portugal exited the bailout programmes, the supervision on the part of the European Union and the International Monetary Fund is now in force only in Greece and Cyprus, and many experts have expected Athens to require additional help.

Turning to a "reform-for-debt-relief" scheme with less supervision could appease public discontent and strengthen the position of the coalition government against the radical left SYRIZA party that is holding the lead in the polls, promising to "break with" the bailout agreements.

Early parliamentary elections could be held as early as next year and a possible SYRIZA-led government would cause a headache for the euro zone, says Reuters.

The plan

Under the new plan, a special task force of the European Commission that would carry out biannual inspections rather than every three months, if Greece would not require fresh funds, would replace the strict supervision on the part of the Troika.

Athens in turn would commit to implement a six-year reform programme, under which its performance would be rewarded with debt-relief measures, such as extending the time for debt repayment rather than new lending.

"There would be no Troika", says a senior official cited by Reuters without indicating his name, according to whom Greece has to assume responsibility for the reforms.

"The Greeks have until October to come up with a programme, which would be decided by December for the start of 2015", he says. In addition, according to another senior official cited by Reuters, a precautionary line of credit would be available to Greece, the use of which would imply stricter supervision of the country.

Concerning the International Monetary Fund, it would continue its bailout programme until 2016, continuing to exercise influence on Greece.

Possible problems 

Reuters continues by commenting that the dismissal of the Troika would mark the end of a model criticized by Greece and the European Parliament for the way in which it enforced heavy economic reforms.

An important point is that the new programme would focus on development and employment rather than on budget cuts, as before. Furthermore, the plan would be prepared by Athens rather than by experts in Brussels or elsewhere.

However, the news agency stresses that in order for the new plan to be put in force it would have to overcome various obstacles.

One of them could be the probability of Greece requiring fresh funds in the event that the costs of stabilizing the banks would increase.

This would require an ordinary bailout to save the country, Reuters stresses.

Meanwhile, a senior official quoted by the agency emphasizes that "If extra public money is required, there is not a single parliament in Europe that would approve it."

Tags: Supervisory TroikaDismissalBailoutReformsEuropean Commission
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