What is at stake here is the essential spirit of European shared solidarity and responsibility. Other European countries went through very difficult times – Ireland, Portugal, Spain, Cyprus and Latvia – to name only these few countries.
All governments took very difficult decisions; some of them paid a very high political price for their solidarity and their financial support to help the most vulnerable countries.
This is what the order of priorities should be: responsibility before individual biographies, countries before parties.
As a former president of the Eurogroup I have seen first-hand how difficult it has been for these countries to work through the crisis and the social hardship that came with it. But political leaders in those countries showed responsibility and made the necessary decisions which are now obviously paying off.
You know well that the Greek people are very close to my heart. This is not paying lip service. I tried again and again and I showed it in recent years that I am on the side of the Greek people and that I place my trust in them too.
I know the hardship they have been through and I have always said that we have to pay more attention to the social fairness of our programmes.
Over the last five months I have been personally involved in the entire process of negotiations – sometimes day, sometimes night. For me Greece’s exit of the eurozone has never been and will never be an option. But I always told my Greek friends that by saying that Grexit is not an option, they shouldn’t believe that at the very end of the process I will be able to present against others a final answer and a final solution to be given to what I have to describe as a primarily Greek problem.
I have explored all the possibilities to accommodate the Greek concerns and to make a deal with the Greek authorities – in the interest, first and above all of the Greek people – while creating, and this is important, at the same time the right conditions for an unanimous agreement with all the other 18 democracies that are lending billions of their taxpayers’ money to Greece.
On our side these negotiations have always been in a true European spirit – based on rules, based on mutual trust. There has never been an “ultimatum or take-it-or-leave-it-approach”. Our sole concern has always been and still is to help make a fair and balanced deal.
I have done everything that can be done to facilitate an agreement – on process as on substance.
On process: we have adjusted our working methods to the wishes of the Greek government: This should not be forgotten this was not an easy thing to be done. No talks happened in Athens, the Brussels Group was created instead of the Troika, we offered continuity in the talks in the face of constantly changing Greek interlocutors and negotiating teams. I worked together with Jeroen Dijsselbloem for talks on a more political level as was the wish of the Greek authorities. This was not left to anonymous technocrats. We had again and again talks at the highest political level between myself, I have been elected by the European Parliament after the result of the European elections campaign and Mr. Dijsselbloem, who is an elected member, who is the chief of the Eurogroup, we brought all the debates to the political level, not leaving this, as I said, to anonymous technocrats. But this was a highly political debate as it had never been before.
My team and I myself have never been short of determination or patience waiting for the Greek proposals which often were delayed or deliberately altered.
This also shows our flexibility and our will to reach a compromise also in regard of content. It was about procedures and it was and is about content.
On content: We went very far to achieve socially fair measures that at the same time can support growth and the necessary fiscal consolidation, and which take account of the requests of the Greek Government.
This is certainly a demanding and comprehensive package, but it is a fair one. And I must stress that it has been developed through months and months, days and days of discussions and debates.
Let me clarify a few things:
There are no wage cuts in this package. And nobody is allow to give the impression that there are wage cuts in this package.
There are no pension cuts in this package. No pension cuts in this package.
In fact, it’s a package which creates more social fairness, more growth and a more modern and transparent public administration.
You should be aware that in many instances, we in the European Commission, had to be the ones insisting on the most socially fair measures. I would have expected the Greek government to push this agenda in line with its campaign manifesto.
Let me illustrate this.
This is not a stupid austerity package. Some of the measures of course will hurt in the near term. But the package goes well beyond fiscal measures and proposes a clear way forward. Moreover, this package lowers the fiscal targets and gives more time to the Greek government to achieve them. Compared to the previous deal, the one we had, it is more than 12 billion EUR less savings that are requested from Greece in the coming years. And in fact the Greek government has already agreed to this and welcomed it. Although we had to discuss in a very intense manner amongst institutions as you know.
By the way, fiscal consolidation does not mean austerity: it means keeping public finances in control while boosting opportunities for jobs and growth. Many Member States have even higher fiscal targets despite having lower levels of debt.
There are, as I said, no wage cuts in this package.This was never, never ever on the table. What is on the table is a proposal tomodernise the wage grid of the public sector. And, for the private sector, we have agreed to review collective bargaining practices. Our only request has been that this should be done in line with the best European practices in cooperation with the institutions and ILO which are the specialists when it comes to this question.
There are no cuts in the level of pensions in this package. Even the Greek government agrees that the Greek pension system urgently needs further reform to be sustainable. It should be fairer so that everyone contributes to the welfare system according to their means. There is a menu of measures to achieve that, starting with removing incentives for early retirement. The government could also substitute measures with alternatives ones as long as the numbers add up.
I am repeating this sentence: The government could also substitute measures with alternatives ones as long as the numbers add up.
The package of the three institutions and President of the EG means more social fairness:
by targeting support to the most vulnerable, for instance through a guaranteed minimum income scheme.
by making sure that the efforts required from everyone are proportionate to their income,
by targeting cuts in areas which do not affect the average wallets of the average citizens, such as through defense cuts
We were asking for cuts in the defence budget and I think we are totally right.
More social fairness by challenging vested interests, such as removing favorable tax treatments for ship-owners. It took some time if not hours to convince the Greek government – I had to do the job of the Greek government to impose a less-favorable tax treatment for ship owners, although this is common sense and in line with tax justice.
The package means more social fairness by fighting corruption. Ordinary people are not those who are corrupted. Others are. We have to fight against corruption if we want to be credible.
More social fairness by supporting more transparency and efficiency of the public administration, including an independent tax administration. Who could be against an independent tax administration. This is the normal rule in all European countries. The same rule has to be applied to Greece and the government agrees to that undertaking.
Once more, we were the ones pushing for these elements. Our offers of technical assistance have not been entirely taken up.
This package of the three institutions and President of the Eurogorup – and I have to underline that Mr Dijsselbloem did an excellent job for the last months, an excellent job – also means more growth and more investment. I believe growth can restart soon and fast once there is a deal. But there are no quick fixes to some of Greece’s underlying problems. We need a thorough set of reforms.
For instance, why is the price of energy and some commodities among the highest in Europe? Because there is a lack of competition and a refusal to tackle vested interests.
Why is the tax collection so poor? Greece needs a stable tax system to promote investment.
And that is why I favoured the proposal to increase corporate tax, but not to the proposal for a one-off retrospective tax for 2014 profits.
The biggest impediment to jobs, growth and investment at the moment is uncertainty. Uncertainty, which can only be removed by agreeing a deal that provides a credible framework for the Greek economy and people. The confidence effect of a deal, the predictability it would bring, together with the injection of liquidity into the economy from disbursements will restore job creation and growth.
So what did happen? And where are we now?
As you know, the Greek authorities walked away from the negotiation table unexpectedly I have to say on Friday night. The negotiations were not finished and the agreement was never finalised. Again on Friday, we were working on further openings and the Commission together with others was proposing to limit the increase of the hotel VAT in Greece to 13 per cent instead of 23 per cent envisaged earlier
The fact that our Greek colleagues of the negotiation team were leaving the negotiation table happened at the worst moment.
President Dijsselbloem and I explained to Mr. Tsipras that a deal on these measures could unlock new disbursements of financial aid allowing Greece to meet its financial needs over the next coming months. We also told him that the Eurogroup was ready to discuss debt measures, in line with the Eurogroup statement of November 2012, already this autumn to ensure the long-term sustainability of Greek public finances. We have already discussed with Klaus Regling, managing director of the European Stability Mechanism how this could be done. Mr Tsipras knows this.
And a deal could also have ensured that we, the Commission, could go ahead with a package for a “new start for jobs and growth” package of 35 billion euro to help the Greek economy getting back on tracks.
Vice-President Dombrovskis was spending hours, days together with all the other Commissioners involved to put together all the elements needed to provide Greece of a growth package of 35 billion euro. This is not only about fiscal consolidation, this is also about pushing forward the growth opportunities for the Greek economy. It is a huge part of the package the Commission, myself together with Vice-President Dombrovskis have been proposing to our Greek friends.
You can see we really moved mountains until the very last minute when Greek authorities closed the door. All elements of a credible and comprehensive deal were on the table.
So I don’t have, unlike recent press speculation suggests, new proposals to make today. I am describing the proposals which were on the table and which were of the nature that we could have – I have to say easily – reached an agreement at the Eurogroup meeting of last Saturday.
What do the Greek people know about our flexibility and determination to help them? What do they know about the details of our common proposals? What do they know about this latest offer we were obliged not to take influence on the Greek votes but to inform the Greek public what is on the table about this offer we published yesterday? So they put together all the elements that we went through all together with the Greek authorities. What do the Greek people know about all this? And the reason why I am addressing the press and via you the Greek people: they have to know what is the truth. They have to know what is on the table. They have to know all the elements of the debates we had for such a long time together when we were sitting around the same table.
I think that the Greek government knows all these elements and it would be advisable to tell the truth to the Greek people instead of simplifying his own message to a ‘no’ message for next Sunday.
In a democracy – and the Greek democracy has the absolute right to put this question for referendum – the absolute right in democracy is to ask people to give their advice.
Every citizen deserves the whole story and the truth and they have to know that – on our side – the door is still open.
This is a highly important moment for the Greek people and for the people of Europe.
It’s the time for Greeks to speak up and to shape their own destiny for this generation and the generations to come.
It is time for Greece’s political leaders to shoulder their responsibility, to tell their people what is really at stake, that it will not be easy but necessary; others did it. Ask the Irish, ask the Portuguese, ask the Spaniards and many others. It is a moment of truth.
I will never let the Greek people down – and I know that the Greek people don’t want to let down the European Union.
Greece is a member of the European family and I want this family to stand together.
Statement on behalf of the European Commission by Jonathan Hill on the capital controls imposed by the Greek authorities
The European Commission takes note of temporary restrictions on the free movement of capital which were announced by the Greek authorities on Sunday evening and have now been published in the official gazette.
In accordance with the Treaty on the Functioning of the European Union, Member States may take measures in respect of capital movements which are justified on grounds of public policy or public security.
In accordance with the case law of the Court of Justice of the European Union, measures may also be introduced for other overriding reasons of general public interest. Such exceptions to the principle of the free movement of capital must be interpreted very strictly, and be non-discriminatory, as well as suitable and proportionate in light of the objective. This also means that capital controls must be applied for the shortest possible period.
As guardian of the Treaties and with a view to safeguarding the integrity of the single market, the Commission has made an immediate, preliminary assessment of the Greek measures that introduce the controls and finds them to be, prima facie, justified.
In the current circumstances, the stability of the financial and banking system in Greece constitutes a matter of overriding public interest and public policy that would appear to justify the imposition of temporary restrictions on capital flows. Maintaining financial stability is the main and immediate challenge for the country.
While the imposed restrictive measures appear necessary and proportionate at this time, the free movement of capital will however need to be reinstated as soon as possible in the interest of the Greek economy, the Eurozone, and the European Union’s single market as a whole. The Commission will closely monitor the situation and the implementation of the imposed restrictive measures on capital movements.
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