Greece has only gained some breathing space and limited partial escape from austerity:More work to be done over next four months

After reading through the exchange of letters between Greece and the troika which are in the public domain  and the impressions of various  commentators it is now possible to get a tentative understanding of what has been agreed to. The document that all parties have signed is sufficiently ambiguous that different interpretations and spins can be placed on certain key passages thereby permitting both sides to claim victory or at least in the case of the Syriza government a partial victory.

For example the new government has agreed to tighten its campaign against tax evasion and corruption in order to ensure better revenue flows to state coffers thereby contributing to a potential larger operating surplus. In return the government has argued that the agreement permits it to run a smaller operating surplus as a percentage of the GDP thereby permitting it to run bigger programs aimed at helping the poor. The agreement also mentions the development of a food stamp assistance program. This may well permit the expansion of such a program into a major policy initiative which  becomes a quasi parallel currency over time allowing for greater stimulus of the domestic economy. The increase in the minimum wage has been delayed until September but there will be no further pension cuts and reinstatement of public sector workers is maintained. The privatizations that have been completed will not be reversed and those underway including the Chinese purchase of part of the Piraeus port will be carried to its conclusion . However the minister of energy has reaffirmed his intention to halt the privatization of a state power company.

The agreement is not without its significant critics both on the left and on the right. Some politicians and journalists on the  the left of Syriza have refused to support the agreement arguing it is a betrayal of the principles on which Syriza got elected. On the right the former governing party argues that the agreement is simply a repackaging of the old agreement and that the tax and anti-corruption measures  were already being implemented by the former government.

Most of all however the agreement has given the new government four months of breathing space to develop an alternative economic strategy that finally permits Greece to escape from the  destructive straight jacket of austerity and debt servitude.This may well be enough to ensure its support base in the difficult months to come.

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About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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