Greece passes pension deal in defiance of bailout creditors

A Greek pensioner leans on a shepherd's crook during a demonstration against planned pension cuts in Athens, Greece, 3 November 2016Image copyright

Image caption

A Greek pensioner at a protest against pension cuts in Athens last month

The Greek parliament has defied the international creditors providing Athens’ bailout funds and voted through a one-off payment to pensioners.

Plans for the €617m (£517m; $656m) pre-Christmas handout were opposed by European bodies negotiating Greece’s financial lifeline.

A deal agreed earlier this month to provide the next tranche of debt relief for Athens is now on hold.

Prime Minister Alexis Tsipras said Greece would not be blackmailed.

Athens said the pension payment would come out of a €1bn tax surplus but European creditors on Thursday said the Greek move raised “significant concerns on both process and substance” regarding the country’s bailout obligations.

In a joint statement, representatives from the European Central Bank, the European Commission and the European rescue fund said they would now decide whether to uphold a Eurogroup decision granting Greece short-term debt relief earlier this month.

Mr Tsipras said the situation had to be resolved “without blackmail” on the part of Greece’s creditors.

France has defended Greece against a hardening stance by Germany and the Eurogroup of EU finance ministers, headed Jeroen Dijsselbloem.

A spokesman for Mr Dijsselbloem said on Wednesday said the eurozone was suspending the recently announced debt relief scheme for Athens in retaliation for not being fully briefed on Mr Tsipras’s handout plans, which also include a lower sales tax for Greek islands dealing with migration.


“The institutions have concluded that the actions of the Greek government appear to not be in line with our agreements,” said the spokesman.

But France’s Finance Minister, Michel Sapin, and the country’s European economic affairs commissioner, Pierre Moscovici, have publicly distanced themselves from the Eurogroup decision.

“Individual statements are not the collective statements of the Eurogroup,” said Mr Sapin.

The latest debt-relief deal with Greece was agreed on 5 December and would reduce the interest burden on the country’s debts of more than €300bn.

The Greek government announced its bonus for pensioners receiving below €800 a month just three days later but without consulting the eurozone representatives.

It also scrapped a rise in VAT for residents of Aegean islands to help relieve the economic pressure caused by an influx of migrants.

The arrangement of 5 December included extending the maturity on certain loans to the Greek government, and locking in the interest rate on some of its debts in order to reduce the country’s repayment burden, but it did not alter the total amount owed.

A key player in the latest decision to suspend the recent debt deal has been Germany.

“If the rescue programme is going to be deemed a success, it is imperative that measures are not taken unilaterally,” said a spokesman for the German finance ministry.