Hope-giving move

Greece offered some concession to the European Union on Monday, a step that may help it avert a default, but politicians did not expect a breakthrough at the summit, later yesterday, to secure the country’s future in the eurozone.

The stand-off between Greece and the EU on its looming credit default is not just about Greece, but also about the fate of fiscal austerity programmes in many other countries faced with similar crises.

The Greek government of Alexis Tsipras was elected on a promise to end the austerity policy of previous governments and put the rights of the middle and lower class ahead of even sound economic and fiscal discipline regimes as requested by Greece’s creditors.

Athens refused to budge in the face of repeated threats from EU countries that unless it revises its anti-austerity policy in favour of a more balanced approach to economic development, it will be left to default on its huge debt that runs in the billions of euros.

The debate between proponents of and opponents to austerity policies is old and acrimonious.

Those against a policy of fiscal austerity put the welfare and interests of the majority of people ahead of other considerations.

This is what Athens insisted on doing, at a high price, risking to undermine its credit rating.

On Monday, however, Greece appeared to acquiesce to lenders’ demand that it increase taxes and reform pensions.

It offered to gradually increase the retirement age to 67 and curb early retirements, and to reform the value added tax system, setting the main rate at 23 per cent.

Many Greeks have withdrawn their deposits from Greek banks, fearing that they will lose their money or the banks will go bankrupt.

Should more people do that, the Greek government will be hard pressed to make judicious choices.

Still, from the look of things, Greece is on the right path. 

Monday’s move saw hope rise on financial markets as eurozone officials accepted for the first time Greece’s reform proposal as a “reasonable” basis for negotiating an aid for reform agreement between Athens and its EU and IMF creditors.