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6 JURGEN BALZAN LOOKING from a distance at the protracted Greek saga, the complex talks in Brussels could easily be mis- taken for a classic good versus evil conflict. Surely, the Greeks should shoul- der their responsibilities for the mess they find themselves in, but so do European leaders and the Troika whose decisions have led Greece down a perpetual spiral of austerity. To put things into perspective, while the Troika demands fur- ther pension cuts, nearly half of Greece's 2.5 million pensioners earn no more than €655 a month, pulling them below the poverty line drawn by the EU itself. Presently, Greece's pension sys- tem is not sustainable and needs major reforms, but demands by EU finance ministers, the European Central Bank and the Internation- al Monetary Fund to cut pensions across the board are insensitive to the realities in a country where one in two households relies on pen- sions to make ends meet. On the other hand, the EU's re- sistance to grant Greece some form of debt relief originates from the fear of creating a precedent and the temptation to keep Greece on a leash. Malta's exposure to Greece amounts to around €175 million and includes a mixture of bilateral loans and guarantees to the Eu- ropean financial stability mecha- nism. As a ratio of GDP the loans put Malta second behind Germany but unlike other eurozone members, local banks have very little expo- sure to Greece – trade between the two countries is minimal. Monday's extraordinary EU summit in Brussels was intended to break the deadlock, but it turned out to be a non-event despite clear signs that an agreement was nearer than ever. Greece's leftwing government has come under fire over the com- promise proposals it submitted on Monday, amid warnings that it will hurt growth and cost jobs. Government spokesman Gavriel Sakellarides admitted that Alexis Tsipras's administration is fully aware that the proposal includes measures "that are hard" but so far there is no evidence of a revolt within the leftwing government's ranks. Positive signs have emerged from both camps, with Sakellarides say- ing that Greece's plan will create "breathing space" to support the recovery, and also spare the coun- try from plunging out of its bailout programme within days. German Chancellor Angela Mer- kel said Greece's latest offer consti- tuted "some progress" but she said more work was needed and "time is short". Greece must repay a €1.6 billion IMF loan by the end of the month and if it fails to honour it, the country risks crashing out of the euro and possibly the EU. 'Grexit not an option' Speaking in Parliament last night, Prime Minister Joseph Muscat warned that a Greek default and subsequent exit from the Eurozone will not be in anybody's interests. "Grexit is not an option," Muscat told Parliament while delivering a summary of Monday's EU sum- mit. "However, Greece and its credi- tors must agree a deal by the end of the week or Greece will go bank- rupt on 30 June," Muscat said, adding that previous proposals put forward by the leftwing gov- ernment were not worth the paper they were written on." He also told MPs that "although it may not sound socially just, there is simply no way for Greece to cut down on its expenditure without reforming pensions." He also said that general consen- sus is moving towards a restruc- turing of Greece's debt but insisted that the possibility of pardoning Greece's debt is "not on the table". Greece's plan will squeeze around €8 billion out of its economy in the next 18 months, through a series of measures, including: higher VAT rates on a wide array of products, higher corporation tax rates, and a windfall tax on profits, higher pension contributions, and phasing out some early retirement schemes. Following Monday's negotiations Greece's economy minister, Gior- gios Stathakis, insisted that his government avoided crossing its red lines with the new proposals. He said there would be no further reductions in pensions or public sector wages and there would be no increase in VAT on electricity. Stathakis also said that the gov- ernment had agreed that the tar- geted budget surplus would be 1% of GDP, 2% in 2016 and 3% the year after. Despite the Greek government's insistence that the long-term solu- tion lay in debt relief, it is highly improbable that creditors will agree to a haircut such as the one granted to Argentina in 2001. Today, eurozone finance minis- ters will meet to give their verdict on the Greek proposal and if it is favourable EU leaders are expect- ed to seal a deal by Friday. maltatoday, WEDNESDAY, 24 JUNE 2015 News Download the MaltaToday App now HAVE YOUR SAY 4JHOVQBOEMPHPOUP.50CTFSWFSBOEIBWFZPVSTBZPO FWFSZUIJOHGSPNDVSSFOUBõBJSTUPMPDBMUSFOETXJUIUIF DIBODFUPXJOQSJ[FTJOPVSXFFLMZDPNQFUJUJPOT.50CTFSWFS JTZPVSDIBODFUPDPOUSJCVUFUPUIFGBTUQBDFEXPSMEPGUIF NFEJBBOEMFOEZPVSWPJDFUPUIFEJTDVTTJPO 7JTJUPCTFSWFSNBMUBUPEBZDPNNU EU leaders hope to avert Greek tragedy The slogan says it all, the Greeks want an end to austerity – but is that realistic?