Greece: Deep Divisions Between Reforms and the Future

The Greek drama continues to unfold like a Shakespearian tragedy.

Greece, the European Union and the International Monetary Fund (IMF) are now involved in last ditch efforts to offer new reforms. These efforts have cheered the markets but will they pass the creditors or even the New Greek Parliament? More importantly will he Greek people accept them? Those are the real questions on investor minds now.

Alexis Tsipras, the prime minister of Greece flew into Brussels on Monday to avert a Greek default. Thousands of Greeks are protesting austerity measures in Athens and the risk of Greece exiting the EU is very real.

Tsipras’ Syriza Party was elected to a resounding victory in January on the back of their anti-austerity pledges. They now face backlash for their new reform proposal to Greek lenders.

Yesterday, the deputy speaker of parliament said the lawmakers would struggle to pass any reform program to lenders. He told Greek Mega TV that such reforms would be very “difficult to pass by us.” Another minister, Adonis Georgiadas has commented that reforms based on higher taxes would “kill the economy” and such measures should be rejected by the “troika”- the popular term for Greece’s creditors, the IMF, European Central Bank (ECB) and the IMF. “What he’s trying to do is exchange reforms for more taxes and the troika should never accept something like that. The philosophy of the memorandum (Greece’s bailout package) was to make our economy more competitive and be able to survive a loan in the real world but with all these taxes (proposed by Tsipras) will kill our economy,” he said.

Georgiadis said he will wait and see what new reforms and taxes were on the horizon. He will then make a decision of whether or not to vote in favor of the reforms at that time. He is “deeply troubled” by what he sees right now and expects a harsh response from the lenders today “and I expect new demands from them.”

Right now, there are protests on the streets and hope that Greece will make some sought of deal to rescue their economy and not exit the EU. There are also protests on the streets protesting more austerity and higher taxes. Such measures have all but crippled the economy and unemployment is extremely high right now. The new measures presented by the EU ministers include higher taxes on the wealthy and large business. They also include painful curbing on early retirement and social security distributions. They are not targeting pensions and public sector wages at this time.

No matter what, today is critical as the EU and IMF are meeting at 1100 GMT. Whether or not Greece can pass any of these measures is the next huge hurdle and big piece of the puzzle.