The bleak anniversary of the 3rd Greek memorandum

1 September by Anouk Renaud

Photo by Stéphan C. - TEMPS ZERO ATHENS (CC)

The 13th July 2015 will from now on be considered to mark Greece’s surrender. On this date, the Syriza-Anel government led by Alexis Tsipras finalised an agreement with the European Union, which resulted in the official signing of a third memorandum on the 14th August 2015 |1| - a true volte-face by the government with respect to its campaign commitments and to the result of the 5th July referendum. |2| Since then, strategic debates on possible alternatives have been heading well within the radical left, |3| but one thing is certain: this third memorandum deepens and consolidates the two that preceded it. For agreeing to a loan with the European Union is agreeing to its conditions. While Greece is no longer under the media spotlight, here we look back (not exhaustively) on a year of social welfare dismantlement, exacerbated dependency and dislocation of the country.

Taxation: The VAT that just keeps on growing

It was one of the pillars of the structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

plans imposed on the countries of the South, it is one of the pillars of the course of austerity treatment imposed upon Greece and particularly of the third memorandum: increase indirect taxes, value added tax (VAT) being at the top of the priorities list. From mid-July 2015, as a prerequisite to opening negotiations on a third agreement, the Greek parliament voted to increase VAT from 13% to 23% for a whole range of products and services, including the restaurant industry, funeral services, show tickets… but also coffee, tea, spices, oil (except olive oil), and sugar. |4| In May 2016, it’s the same story. In the wake of the vote on the 8th May on the fiscal reform law, the Vouli – the Greek parliament – adopted on the 22nd May a whole series of measures buried in 7000 pages of legislative text. |5| VAT was raised by one point and henceforth rose to 24% for many staple products such as pasta, rice, coffee, but also tobacco and petrol. On the 8th May, the threshold of tax exemption on annual revenue was also lowered from 9,550 euros to 8,636 euros, while Syriza had promised in its manifesto to get it back up to 12,000 euros. |6|

Farmers are one of the socio-professional categories that have been a particular target in terms of taxation by this third memorandum and the law voted in on 8th May. The goal: to radically reduce small-scale peasant farming in Greece in order to open the gates to agribusiness, which has still not been implemented in the country to any great degree. An aspiration clearly held by the government, for whom the aim would be for two thirds of farmers to ‘leave the profession’, for there to remain only 275,000 of the 750,000 farmers applying for subsidies within the remit of the Common Agricultural Policy (CAP). |7| To reach this goal, the heavy artillery has been brought out: cancellation of exemptions on diesel fuel, elevation of VAT to 23% on agricultural tools and inputs, removal of the non-imposition threshold of 12,000 euros, doubling of the taxation on revenue that will reach 26% in 2017, payment of this tax on an anticipatory basis, and an increase in social welfare contributions to 30% of their revenue. To which are added the abandonment of the project to renegotiate bank loans and the liberalisation of the milk market. This will have a disastrous effect on Greek farming operations, of which 90% are either on a small or a medium scale. When faced with the announcement of all these measures, the peasant farmers resisted with an important social movement in 2015 but which unfortunately has not caused Tsipras’ government to retract.

Social security: decrease in pensions, season 6

The first act of the pension ‘reform’ led by Tsipras’ government was carried out in October 2015 and corresponded to the implementation of measures clearly specified in the third memorandum. Here again, from North to South, the requirements of the Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

cannot be characterised by their originality, since they contain the henceforth-famous report on the legal retirement age. From 2022, an employee will be able to get a full rate pension at age 62 if he/she accumulates 40 annuities or at age 67 based on a minimum of 15 annuities. A brake has been put on early retirement leading to its total disappearance in 2022. The supplementary payment to the poorest pensioners (the EKAS) will be progressively phased out up until 2019. With regard to current pensions, these have also been affected via a rise in health contributions: from 4 to 6% for primary pensions and from 0 to 6% for supplementary ones, by means of retroactive tax levies.

The following stage of this dismantling of pensions (of which the content was supposed to be left to the appraisal of the Greek government, according to the terms and conditions of the third memorandum) took many months to be adopted. And for good reason! Having sanctioned a significant reduction in pensions, this reform – in the past a well-known ‘red line’ – struck against the anger and the mobilisation of trade union organisations and other forms of resistance. Only after several months punctuated by general strikes and blockades did the Greek parliament manage to scramble together (by a weak majority) a law titled “The unified social security system, reform of the pension system and regulation of the tax on revenue”. Under the guise of a simplification of the system, the pension will be broken down into three parts. First, a fixed national pension of 384 euros. Then, a primary pension, of which the amount depends on the number of years of contributions – the basis for calculation taking into account the five best years in terms of salaries is expanded to all salaries, and the replacement rate drops from 60% to 40.7%. |8| Lastly, there is a complementary pension for those who have paid into a pension fund Pension Fund
Pension Funds
Pension funds: investment funds that manage capitalized retirement schemes, they are funded by the employees of one or several companies paying-into the scheme which, often, is also partially funded by the employers. The objective is to pay the pensions of the employees that take part in the scheme. They manage very big amounts of money that are usually invested on the stock markets or financial markets.
. |9| The toughening of the conditions and criteria for the right to a pension amounts to lowering their amounts, which furthermore takes place in a context of generalised unemployment where it will become more and more difficult to gather the number of annuities required to obtain a pension worthy of its name. The decrease in the average Greek pension, which is 750 euros per month, is estimated at 15%. |10| In terms of finance, the Syriza government points out that social welfare contributions for the elderly are raised by 1 percentage point on the employer’s side against 0.5% on the part of the employee. Yet this is forgetting to weigh this one little percentage point against a 3% drop in employers’ contributions two years ago…

This reworking of the Greek pension regime does not restrict itself to a series of measures that will impoverish pensioners that little bit more, but also fundamentally modifies the character of the system in favour of a loan back pensions system. If this reform, embodied by the third memorandum, marks the sixth cut to Greek pensions since the Troika’s tutelage began to suffocate the country, and although the plan to modify the very nature of the pension regime was already on the agenda of previous memoranda, the Syriza-Anel government has for the first time begun to give weight to it.

Privatisation: everything must go!

In direct line with the previous governments, the great Greek clearance sale persists and intensifies. The third memorandum defines a goal of 50 billion euros to be attained through a broad privatisation programme, run by a new privatisation fund that will replace the HRADF |11| agency created in 2011.

The first major privatisation scheme led by the Tsipras government was the forty-year concession of operation and extension rights for fourteen regional airports, in December 2015. The value of this operation is estimated at 8 billion euros |12| for the total duration of the concession. Although the annual return generated by these airports was elevated to 150 million, that is 6 billion euros over 40 years, this airport network is characterised by strong economic potential. And this fact has not escaped the Troika. In effect, initially, Greece had in mind to privatise its ensemble of airports in two batches, mixing the installations in deficit with those in profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. . But the European institutions rejected this project and demanded that the privatisation package contain only good bargains. |13| And the windfall effect does not stop there… The conditions of the contract signed by Fraport, the German society that won the bid, proved to be more than advantageous: exoneration of real estate or property tax and no obligation to keep on the contractors, suppliers, traders… of the airport. The Greek public powers even took it upon themselves to compensate the latter if they did not have their contracts renewed by Fraport! Ditto for the employees who would be dismissed. And it goes on… to the extent that Greece goes as far as to take on the responsibility of work-related accidents and the environmental assessments that are eventually to be carried out! |14| At this point, it is hard to know whether to speak of a good bargain or a full-blown heist. The saucy details on this privatisation document are decidedly abundant, since the HRADF had designated Lufthansa Consulting as the technical consultant for the call for bids. Yet this enterprise is none other than an 8.45% shareholder in Fraport, which itself belongs primarily to the German state of Hesse and the town of Frankfurt.

Barely one month after this privatisation of airports, in January 2016, Syriza finalised the sale of the Port of Piraeus. It is the Chinese company Cosco, which already ran two out of the three terminals through a concession contract signed in 2008, which won the bid. Which was not in itself particularly difficult since the call for bids was only extended to that one company. Once again the Greek public authorities will come out as the big losers from this transaction. Cosco has in effect disbursed 368.5 million euros to buy the port, but HRADF estimates that the total gain of this operation will rise to 1.5 billion euros, taking into account future fiscal revenues and the 350 million in investments promised by the company. Nonetheless, this calculation does not take into account the fact that with this sale the Greek State loses out on the rents from the concession that it had left, which appears to be at least 700 million. And as for the promised investments, we must not forget that the sales contract contains a clause that prohibits all sanctions towards Cosco in the event that these commitments are not respected... |15|

The next privatisations will be the Port of Thessaloniki and the railways. For 2016, Greece has budgeted 2.33 billion euros from products derived from privatisation schemes. As a comparison, privatisation schemes in 2013, 2014 and 2015 have returned 984 million, 667 million and 67 million euros respectively. Which means that the Greek government is counting on selling in one-year public goods with a value superior to that of all the public goods sold over three years. |16|

Incidentally, on the 22nd May, Greece shifted into high speed mode in terms of privatisation by voting in the creation of a new private society in place of HRADF: The HCAP S.A. (Hellenic Corporation of Assets and Participations S.A.). This super-fund functions as a veritable holding with four subsidiaries that it both manages and legally owns: the privatisation agency HRADF, the Hellenic Financial Stability Fund (HFSF) and two other entities charged with monitoring the assets, enterprises and other properties of the Greek State. |17| While the HRADF managed 25% of Greek assets over 6 years, all Greek assets in their entirety |18| have been transferred (without compensation) to the HCAP S.A., which now has full legal ownership, and for 99 years! More than 71,500 public holdings |19| have already been handed over to the fund, which represents no more and no less than the largest property transfer in a Western European country. The board of directors of the HCAP S.A. comprises of five members, of which two are nominated directly by the Troika (and of which one is the fund’s president, as required by its statutes) and three by the Greek government… after explicit validation by the very same Troika.

Private banks: preparing the playing field for the vulture funds Vulture funds
Vulture fund
Investment funds who buy, on the secondary markets and at a significant discount, bonds once emitted by countries that are having repayment difficulties, from investors who prefer to cut their losses and take what price they can get in order to unload the risk from their books. The Vulture Funds then pursue the issuing country for the full amount of the debt they have purchased, not hesitating to seek decisions before, usually, British or US courts where the law is favourable to creditors.

In the stack of pre-requisite measures voted in in August 2015, we find two very significant ones for the private banks. On the one hand, the banks have become, in the eyes of the Greek law, privileged creditors. In other words, in the case of the bankruptcy of a business, their debts must be covered as a priority before their eventual payment of salaries, compensation for dismissals or other suppliers. On the other hand, the procedures of the civil code have been modified in order to allow, notably, acceleration of expulsions, liquidation of primary residences and lowering of the procedural costs.

In Autumn 2015, following its stress test on Greek banks, the ECB ECB
European Central Bank
The European Central Bank is a European institution based in Frankfurt, founded in 1998, to which the countries of the Eurozone have transferred their monetary powers. Its official role is to ensure price stability by combating inflation within that Zone. Its three decision-making organs (the Executive Board, the Governing Council and the General Council) are composed of governors of the central banks of the member states and/or recognized specialists. According to its statutes, it is politically ‘independent’ but it is directly influenced by the world of finance.
estimates that the financial needs of the former will rise to 14 billion euros, of which 5.4 billion will be provided directly by the Hellenic Financial Stability Fund (HFSF) in December. As a reminder, the third memorandum allows for a reserve fund of 10 to 25 billion destined to satisfy the capital needs of the Greek banks.

In the same month of December 2015, the steps to liquidate the rotten credits of the banks registered in the loan agreement started to be put into effect. The green light was thus given to the banks to resell their non-performing loans, or in other words the rotten credits that have not been repaid for at least 90 days. The reform of the Greek civil code voted in in August 2015 now took on its full meaning, given that it will allow the speculation funds which will buy them up to demand more easily the expulsion of indebted Greek citizens and to recover the mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral.
on their houses… Syriza had tried to reinforce the safeguard on seized property, but the creditors were having none of it. After some disagreements on figures and therefore also on the number of people overburdened with debt to be spared by the predatory practices of the banks and other speculative funds, the two parties reached a middle ground in November 2015: a law that predicts, under some conditions, the seizing of goods whose owners are no longer able to repay their debts. The conditions in question are that the value of the residence be higher than 170,000 euros and that the annual revenue of the debtor be more than 8,180 euros for a single person and 20,639 euros for a household with two children or more. These criteria will protect only 25% of mortgages. |20| By way of comparison, the previous law adopted by the Samaras government forbade the seizing of houses worth less than 200,000 euros if the owner’s annual revenue was no greater than 35,000 euros and his/her estate was worth less than 270,000 euros.

At the same time towards the end of 2015, and even though since 2010 the sums of public money injected into Greek banks rose to 42.7 billion euros, the Greek public authorities resold, again at very interesting prices, some of the shares they owned in Greek banks. If the HFSF still holds shares within the capital of Greek banks, it should be reminded that it does not exercise any particular control in them and that in five years time the third memorandum predicts the full privatisation of the banking sector.

To drive the point home and fill in all the potholes that could arise in the road of speculation funds and banks, on the 22nd May, a liberalisation measure to sell banking credits was adopted by the Vouli.

Sovereignty: did you say colony?

The third memorandum is not confined to a precise list of austerity measures. Equally it sanctions very clearly a framework that presides over relations between Athens and the institutions, since it stipulates that: “The Government commits to consult and agree with the European Commission, the European Central Bank Central Bank The establishment which in a given State is in charge of issuing bank notes and controlling the volume of currency and credit. In France, it is the Banque de France which assumes this role under the auspices of the European Central Bank (see ECB) while in the UK it is the Bank of England.

and the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
on all actions relevant for the achievement of the objectives of the Memorandum of Understanding before these are finalized and legally adopted.” The structural reforms taken by the Syriza-Anel government show the nature of the relations that the agreement ratifies, namely the continuation of being placed under neo-colonial tutelage.

In Autumn 2015, Greece set up a fiscal disciplinary board composed of seven members, of whom three were nominated by the Greek ministry of finance but only after approval by the institutions, and two were nominated directly by the Troika. From 22nd May 2016, if Greece were to stray too far from the budgetary goals in place, this board is able to apply a “correction mechanism” which allows the automatic carrying out of budget arrangements, without putting it to a parliamentary vote or basic decree. And as a reminder, the Eurogroup imposed a goal of budgetary surplus of 3.5% of GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
from 2018. You might as well call it mission impossible. It is therefore almost certain that this mechanism, nicknamed koftis in Greek (cutting pliers or secateurs) will be used.

The package voted in on 22nd May 2016 by the Greek parliament also comprises a reform of the statute of the Greek public treasury. Already autonomous in its actions and the way it uses its budget since the first memorandum, it will from now on be a completely independent agency with the monopoly on the interpretation of legislation on fiscal matters and whose decisions even have the value of a ministerial decree. You will have guessed that this independent authority for public revenues is likewise under the auspices of the Troika.

As summarised by Stathis Kouvélakis, the Troika therefore controls not only spending but also income in Greece. The country sees itself equally stripped of its monetary policy, which belongs to Frankfurt. And it can be concluded that “Greece now finds itself placed under a regime of administrative supervision, which already existed since the start of the memorandums and the reign of the Troika, but which has now reached unprecedented levels. The Greek state has been stripped of all its possible forms of leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. ”. |21|

Will there be an end to the nightmare?

All the measures applied by the Syriza-Anel government during the last year within the framework of the application of the third memorandum are in the same vein as those put in place since 2010, but these push the logic to an unprecedented level, be it in matters of privatisations, pension reform or the financial institutions’ stranglehold over the country. What’s more, while the agreement protocol did not allude to it, Greece will from now on subcontract Europe’s vicious migratory policy with the conclusion and application of the agreement between the European Union and Turkey since March 2016.

The Greek ministry of foreign affairs has also expressed its disagreement with the European policy of differently labelling products that come from Palestinian occupied territories – a pro-Israeli position reinforced by the Tsipras’ designation of Jerusalem as Israel’s capital or even the pursuit of the military cooperation agreement with Tel Aviv since August 2015.

When will the Greek people see the light at the end of the tunnel? No time soon it would seem. In the coming months the Troika and the Greek government will tackle new dossiers and, notably, a reform on the labour code. Already under widespread attack by five years of memorandums, one could have thought that not a lot remained for the Greek people in terms of labour law… But that is of little importance to European institutions, which keep on wanting more. After having voted on the opening of shops on Sundays in the summer of 2015, mass firing procedures, restrictions on the right to strike (or rather, on what is left of it!), the protection of trade unionists and the public financing of trade unions will be on the agenda in the next quartet’s review in Athens.

How to end this retrospectively dire outcome without talking about the debt… which justifies the implementation of all these measures. Freeing up budgetary surplus |22| in order to honour deadlines for repayments has thus become the new credo of the Greek government, trying to legitimate its allegiance to its creditors due to the prospect of reducing this debt. A prospect, however, that only keeps drifting further away. On the 24th of last May the Eurogroup undertook to open the discussions on a restructuring of the Greek debt in 2018 if the third memorandum was applied well and if such a restructuring were necessary. No guarantee then. Especially since even if this discussion were to take place, its scope is already largely defined since there will be no question of a real reduction in the amount of the Greek debt. And even if there were such a tiny reduction, it would still always come with conditions that pursue destructive neoliberal agendas.

General sources:
• Léonidas Vatikiotis, intervention “Mémorandums ‘de gauche‘ : dégâts, resistances et alternatives” (“‘Left-wing’ memorandums: damages, resistances and alternatives”), Brussels, 29th February 2016
• Stathis Kouvélakis, intervention “Après la capitulation de Syriza, quelles strategies pour la Gauche en Europe ?” (“After Syriza’s surrender, what strategies remain for the Left in Europe?”), Paris, 4th June 2016
• Le, AFP, AP and Reuters, “La Grèce adopte de nouvelles mesures de rigueur pour assurer la suite de son aide” (“Greece adopts new measures required to ensure the continuance of its aid”), Le Monde, May 2016. Available at:

Special thanks: The author thanks the following for their proofreading and valuable suggestions: Tassos Anastassiadis, Marie-Laure Coulmin-Koutsaftis, Stathis Kouvélakis, Fabien Perrier and Eric Toussaint. The author is fully responsible for any potential errors found in this article.

Translated by Trommons


|1| The agreement protocol was finalised with the European Stability Mechanism (ESM) after receiving approval from Eurogroup. The International Monetary Fund should participate in this finance program on equal terms

|2| 61% of voters responded “no” to the measures proposed by the European Union

|3| This is notably one of the raisons d’être of the Plan B initiative in Europe. For more information, see:;

|4| Elisa Perrigeur, “En Grèce, la hausse de la TVA exaspère les commerçants, « fatigués »” (‘In Greece, the rise in VAT exasperates “tired” shopkeepers’), Le Monde, July 2015. Available at:

|5| Alexia Kefalas, “De nouvelles hausses de la TVA mettent la Grèce au régime sec” (‘New rises in VAT make Greece go tee-total’), Le Figaro, May 2016. Available at:

|6| By way of comparison, this threshold for exoneration is set at 9,700 euros for France and at 7,380 euros for Belgium.

|7| Léonidas Vatikiotis, intervention “Mémorandums ‘de gauche‘ : dégâts, resistances et alternatives” (“‘Left-wing‘ memorandums: damages, resistance and alternatives”), Brussels, 29th February 2016

|8| Dimitris Stratoulis, “Des coups mortels portés au système des retraites” (“Fatal blows dealt to the pensions system”), summarised by Stathis Kouvélakis, CADTM, August 2016. Available at:

|9| Romaric Godin, “Grèce : le gouvernement présente sa réforme des retraites” (“Greece: the government presents its pension reform”), La Tribune, January 2016. Available at:

|10| Romaric Godin, cited above

|11| Hellenic Republic Assets Development Fund

|12| These 8 billion euros comprise the 1.23 billion euros paid to the Greek State on completion of the contract, to which are added concession rights and the annual tax payments. See Niels Kadritzke, “Grande braderie en Grèce” (“The great Greek clearance sale”), Le Monde Diplomatique, July 2016

|13| Niels Kadritzke, cited above

|14| Niels Kadritzke, cited above

|15| Niels Kadritzke, cited above

|16| Léonidas Vatikiotis, cited above

|17| European Commission, Compliance Report. The Third Economic Adjustment Programme for Greece. First Review, June 2016, page 11

|18| With a few minimal exceptions, such as archaeological sites.

|19| Massimo Prandi, « Grèce : le parlement approuve des nouvelles mesures d’austérité », Les, mai 2016. Available at:

|20| Eva Betavatzi, “The evolution of the discussion of the Greek debt”, CADTM, March 2016. Available at

|21| Stathis Kouvélakis, intervention “Après la capitulation de Syriza, quelles strategies pour la Gauche en Europe ?” (“After Syriza’s surrender, what strategies remain for the Left in Europe?”), Paris, 4th June 2016

|22| A budgetary surplus is when, excluding the servicing of the debt, a State manages to have more revenue than expenditure.


Anouk Renaud

Permanente au CADTM Belgique




35 rue Fabry
4000 - Liège- Belgique

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