The parliamentary leader of Dutch prime minister Mark Rutte’s liberal party said on Sunday there could be no debt relief for Greece and the country needed to stick to its commitments.
“The Greeks have a choice to make,” Halbe Zijlstra told the Sunday morning talk show Buitenhof: “In or out of the euro.” If they want to stay in, he added, “they must make good on their agreements.”
Greece’s new far-left prime minister, Alexis Tsipras, reneged on some of the conditions of Greece’s bailout immediately after taking office last month, rolling back the privatization of his nation’s largest seaport and its public power utility. He also announced plans to rehire public workers, raise the minimum wage, reinstate pension bonuses and scrap a new property tax. Those measures would also violate the terms of Greece’s current bailout.
Tsipras showed no intention of reversing course in his first speech to parliament as prime minister last week. “The bailout failed,” he insisted.
Zijlstra said he was exasperated by the new Greek government’s intransigence. “It’s giving us the finger,” he said.
On Monday, the Netherlands’ Jeroen Dijsselbloem, who chairs the meetings of eurozone finance minister, is due to continue talks with the Greeks about their demands. Dijsselbloem’s Labor Party leader, Diederik Samsom, earlier suggested there could be more favorable conditions attached to continued European financial support for Greece. Zijlstra, whose liberal party rules in coalition with Labor, disagreed, exposing a rift in Rutte’s two-party government.
Zijlstra did say the Greeks could makes changes in the economic and fiscal reform effort they have undertaken since 2010 in order to qualify for a total of €240 billion in financial support from other European Union countries and the International Monetary Fund.
But it is in terms of reform that Greece has made the least progress. It repeatedly missed its targets and deadlines for budget cuts and liberalization and failed to taken advantage of the crisis to thoroughly shake up its economy.
Dutch experts who were supposed to help Greece set up a reliable national land registry office were simply dismissed. Attempts to establish a truly independent tax administration have been frustrated at every turn.
Under its first bailout, Greece was supposed to raise €50 billion by selling off state property. That number was later cut in half and the target date postponed to 2020. Yet almost no progress has been made and Tsipras reversed the privatizations that did happen.
The ease of doing business in Greece has improved a little in recent years but the country remains among the worst places to do business in Europe.
In the years leading up to the crisis, Greece expanded its public sector by an estimated 150,000 workers to over one million, or 21 percent of the workforce. Public health expenditures grew from 5 to 7 percent of economic output; public spending on pensions rose from 11.8 to 13 percent.
Government spending relative to economic output kept rising during the bailout years, from 52 percent in 2010 to 59 percent in 2013. Partially this was because the Greek economy shrank. But it also reflected the country’s failure to control public spending.
The Dutch have run out of patience. The Euroskeptic Freedom Party, which advocates a withdrawal from the European Union, is the second largest in the polls after Rutte’s liberals. Surveys have shown a majority of the Dutch would rather Greece abandoned the single currency.
Leaders in other Northern European countries, including Finland’s Alexander Stubb and Germany’s Angela Merkel, have also ruled out debt relief.
Most of Greece’s privately-held debt was restructured in 2012. Some 90 percent of its debt is now owed to official creditors, mainly other eurozone governments.
Under existing agreements, Greece is not expected to start paying back until 2022. The costs of servicing its debt are fairly low at an estimated 2.6 percent of annual economic output.