It's not the Grinch Who Stole Christmas -- It's the Eurozone, the Eurogroup and the European Stability Mechanism

The relative EU poverty of Greek citizens has not improved in the last year, even though Prime Minister Alexis Tsipras has managed to produce a surplus in his current national budget. It is what he has decided to do with some of that surplus -- produced on the backs of every Greek citizen -- that has created the latest row between Greece and its creditors. • • • THE FACTS IN THE DISPUTE. The Guardian wrote on Wednesday that the relationship, always tenuous, between Greece and its creditors has turned uglier after the European Stability Mechanism (ESM), which is the body financing Greece’s €86 billion bailout program, decided to freeze payments under the deal on short-term debt relief measures. Greek Prime Minister Tsipras was not informed before the action was announced, and so he was as surprised as all Greeks were when the ESM announced it would not honor an accord to ease the burden of repayment obligations on Greece’s huge debt. The ESM decision was taken as direct retribution for a series of surprise social welfare measures unveiled by Tsipras and has put the Greek government on what the Guardian calls "a war footing with lenders amid mounting signs of the Greek crisis flaring again." • The fight began because last week, Tsipras took the unexpected step of declaring a one-time pre-Christmas bonus for an estimated 1.6 million retirees living on €800 or less a month -- a new spending measure that will cost the Greek Treasury €617 million. This week he added that the Aegean islands would be exempt from a sales tax [VAT] demanded by creditors in last summer's negotiations. A spokesman for the ESM said : “Following recent proposals by the Greek government to spend additional fiscal resources for pensions and VAT, our governing bodies have put their decisions temporarily on hold.” This apparently means that the deal that would have deferred interest rate increases on Greece’s debt to its creditors is now in limbo. The ESM spokesman said : “Institutions are currently assessing the impact of Greek government decisions vis-à-vis the ESM program commitments and targets. [We] will then analyse the institutions’ assessment and subsequently decide how to proceed.” • Not only is the ESM angry with Greece, so is the Eurogroup of finance ministers, representing members of the Euro single currency, who earlier suggested that Athens had acted out of line. In addition, on Wednesday Germany -- the single biggest contributor to the three bailouts Greece has received since 2010 -- said the benefits were incompatible with program targets. • But, Tsipras has taken a different position : “I think everyone has to respect the Greek people, who for the last seven years have made huge sacrifices in the name of Europe. We have carried the weight of the refugee crisis. In the name of Europe we have, in recent years, implemented an extremely hard policy of austerity. There has to be respect from all....Everything that we are doing is absolutely within the framework of the accord which we are keeping and which our partners should keep, too.” Tsipras, whose popularity has fallen considerably since his leftwing government implemented wage cuts and tax increases it once vowed to overturn, now appears to be in an anti-austerity 'fighting' mood -- despite the outcry from the ESM and the Eurogroup, he has categorically refused to rescind the special one-time pension supplement, saying the €617 million required for the bonus will be drawn from the budget surplus his government has managed to achieve. Not stopping with the Christmas pension bonus, Tripras announced while visiting Thessaloniki on Wednesday that his government would spend €11.5 million next year to extend free meals to 30,000 underprivileged schoolchildren. Tsipras said : “This program has been factored into the budget of 2017,” denying that the aid would derail the program of tough fiscal targets Greece has agreed to meet. • • • THE CREDITORS. The Telegraph reported Wednesday that Greece's creditors have suspended the debt relief deal because of Tsipras's announced series of spending increases in defiance of Brussels' austerity demands. A spokesman for the Dutch Eurogroup president Jeroen Dijsselbloem said : "The institutions have concluded that the actions of the Greek government appear to not be in line with our agreements." The agreements that were concluded recently included a provision for Eurozone finance ministers to cut 20% off Greece's debt share by 2060. But, the Tsipras action led the Eurogroup to reverse its decision, citing concerns that recent spending measures announced by Tsipras "would hamper agreed budget targets....[There is] no unanimity now for implementing short-term debt measures." A spokesman for the ESM, the bailout fund keeping Greece afloat, said creditors would assess the impact of recent spending decisions before coming to final decision on future debt relief in January. • • • GREECE IS TRAPPED IN DEBT BAILOUT AUSTERITY DEMANDS. It must be added that the announcements were made by Tsipras without consulting the country’s creditors, including austerity champion Germany, in a move many observers believe to be a direct challenge to the Eurozone’s calls for greater spending cuts. And, Reuters reported on Thursday that the Greek government will not bow to pressure to scrap the pre-Christmas payout to poor pensioners, quoting the Greek finance minister, who said the bonuses are an effort to maintain credibility with its people as well as its international lenders. In Athens, lawmakers approved the €617 million ($640 million) bonus payments late on Thursday. Speaking during a visit to Berlin, Finance Minister Euclid Tsakalotos said European states need to be allowed to show they can solve their own problems to help restore confidence after strong gains for populist parties in several elections. Tsakalotos told reporters in Berlin : "(Greek) people have to see that sacrifices of now six, seven years are at last starting to pay off. If the unemployed, pensioners do not see that they have a role, a part in the growth after the crisis, then this Europe is in very, very serious trouble." Tsakalotos told Reuters there were "bigger fish to fry" than getting embroiled in a row over the one-time Christmas bonus payment for poor pensioners. But, even accounting for it, he said he is confident Greece will be well ahead of its primary fiscal target for 2016, and the economy had almost certainly grown in the first three quarters of the year. • The Tsipras government, clinging on to a razor-thin majority in parliament, has no intention of stepping down, Tsakalotos added. On Thursday, it faced the latest in a series of protests in Athens by pensioners, many of whom have seen their incomes slashed since 2010 during austerity programs implemented by a succession of governments to meet the terms of three international bailouts. • The prospect of the Greek debt crisis flaring up again came as Athens also tangled with the International Monetary Fund which, with the exception of a third bailout signed last summer, has supported the rescue packages shoring up the Greek economy. On Tuesday, Tsipras derided IMF staff as “foolish technocrats” who had repeatedly miscalculated the impact of recessionary policies on the country. “They can’t even get their numbers right,” Tsipras said, after Greek officials reacted furiously to what they described as intense IMF pressure to adopt further austerity once bailout loans end in 2018 : “They’ve often admitted that they’ve been wrong, but now they’re telling us again, ‘What’s wrong is right’.” With escalating disputes -- and local media painting relations with creditors in terms of open warfare - hopes of concluding an ongoing review of the latest program have faded. Tsipras, hopes to break the deadlock in talks later this week with his French and German counterparts, explaining his views on the importance of the bonus payment, as well as his decision to maintain a 30% discount on levels of VAT charged on some Greek islands affected by the refugee crisis. But, Tsipras has signalled that he will ask the IMF to withdraw from the bailout altogether. Few believe that will calm creditor sentiment at a time when Athens is perceived to be dragging its feet on reforms. • • • DEAR READERS, the pension bonus proposed by Tsipras infuriated officials in Germany and some other Eurozone member states -- but we should consider that the average state pension in Germany is €1,264 [the 2012 average, which is the latest available], with most German retirees also having self-funded pensions as well. And, in another sign of European divisions over how to handle Greece, French President Francois Hollande and his finance minister came to Greece's defense on Thursday. In addition, a top European Commission official on Thursday questioned the creditors' decision and said there was no reason to question the debt relief deal. Tsakalotos said he was disappointed the International Monetary Fund had not done more to assert its view with the Eurozone about the importance of providing debt relief to Greece. • There is, of course, the ongoing argument that Greece for many years ran a govenrment that was sloppy about taking in taxes but quick to accept bribes. But, there is no argument that Greeks have been treated brutally because their southern agricultural and tourist based economy is unable to behave like the northern European economies now bailing them "out" -- actually the Eurogroup is bailing Greece "in" to generations of poverty and subservience while they try to meet the strict austerity measures forced on them as the cost of staying in the Euro common currency. The Eurozone and the Eurogroup should remember that Spain and Portugal, and several eastern European EU states, are watching. As one London newspaper put it this week -- the way things are going for Greece, the UK may be the only friend Brussels and its northern EU leaders have left. Think about the irony in that.