Edward Scicluna

Tsipras Mandate Main Barrier to Greek Deal, Scicluna Says

Prime Minister Alexis Tsipras’s mandate from the Greek people is the biggest stumbling block to a deal with the country’s creditors to help avert a default, according to Maltese Finance Minister Edward Scicluna.
Tsipras’s government was elected on a platform of ending austerity tied to bailout payments, yet Scicluna and his fellow euro-area finance ministers insist that aid cannot flow without some adherence to the reform agenda. Allowing too much flexibility to Greece would risk sending the wrong message to other states, he said in an interview in the Georgian capital, Tbilisi, on Friday.

 

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“You have to find a balance between the moral hazard and also being realistic — helping this country because the ramifications are so huge, that you don’t want to face them, if you don’t want a Grexit,” Scicluna said. Being realistic means one has to “recognize that the situation is what it is and you cannot turn the clock backwards.”
With Greek finances deteriorating rapidly amid a standoff over aid, Tsipras has floated the idea of a referendum or early elections to clinch public support for a possible deal with creditors. A referendum might enable those in the Syriza-led government who reject concessions to be sidelined, and has already received support from German Finance Minister Wolfgang Schaeuble.
Mandate ‘Modified’
“The mandate that the Greek government has got, that is the stumbling block, and that’s why some quarters are asking whether there should be a referendum,” Scicluna said. “That could be a way where the mandate could be modified. The government would obtain permission from its electorate to modify its promises, which cannot all be kept.”
Creditors in turn may be open to part of Syriza’s agenda as long as the measures are aimed at cushioning the impact of spending cuts on the most disadvantaged Greeks rather than giveaways to the entire population, Scicluna said.
“There are certain promises which us creditor countries are ready to allow in addressing pockets of poverty, to help people who have found themselves in big financial problems,” he said.
More generally, Scicluna said that the European Commission should allow more flexibility when scrutinizing member nations’ adherence to its budget-deficit and debt limits. The Maltese government insisted on a slower adjustment than prescribed by the commission to preserve growth and increase employment, he said.
“If we had followed the rules of the commission with the structural effort to the decimal point as they were, we would have flunked and depressed the economy,” he said. “This is the secret of letting the economy grow, which produces the revenues and allows you to consolidate in a less painful way. Somehow this is not understood. It’s understood at the political level but the technical rules have not changed.”

 

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– Bloomberg Business : 15th May, 2015

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