BRUSSELS/ATHENS (Reuters) - Greece snubbed its international lenders and legislated plans on Thursday to give pensioners a one-off Christmas bonus despite misgivings from creditors in a standoff over the country’s third bailout.
Lenders announced on Wednesday that they were suspending a deal clinched earlier this month to offer Greece short-term debt relief after Prime Minister Alexis Tsipras unexpectedly said he would grant low-income pensioners a pre-Christmas payoff.
The move by Tsipras infuriated officials in Germany and several other member states, but French President Francois Hollande and his finance minister came to Tsipras’s defense on Thursday in a sign of European divisions over how to handle Greece.
As shadowboxing over dealing with Greece’s conundrum deepened on the sidelines of an EU summit in Brussels, lawmakers in Athens backed the decision to allocate 617 million euros - a surplus from savings - in a bonus to pensioners.
“(Greek) people have to see that sacrifices of now six, seven years are at last starting to pay off,” said Greek Finance Minister Euclid Tsakalotos in a visit to Brussels.
But jaded by those sacrifices and almost a dozen pension cuts which has pushed almost half of the country’s elderly into poverty, about 5,000 pensioners marched peacefully through the streets of Athens on Thursday night.
“We came here to send a message. No more!,” protesting pensioner Efstratios Bozos told Reuters.
“Our pensions have become restaurant tips.”
Arriving at an EU summit in Brussels, Hollande said it was wrong to prevent Greece from taking “sovereign decisions” and suggested that euro zone ministers had not granted Athens sufficient debt relief.
Finance minister Michel Sapin, speaking in Paris, expressed understanding for Tsipras’s decision to spend 617 million euros on pensioners because Greece had exceeded its 2016 primary surplus target.
Greece unveiled the pensioner payout and a separate decision to keep lower value-added tax on some islands without consulting euro zone governments, which now own most of Greece’s public debt, although the bailout agreement says it must.
The consultation would have given lenders time to assess the fiscal and economic consequences of the two Greek decisions for the bailout reform program and targets. Germany has asked the institutions to check if the Greek decisions are in line with bailout obligations.
The differences come amid a deep rift between Athens, its European partners and the International Monetary Fund (IMF) over the reforms needed to get the Greek economy, in recession since 2009, back on track.
The IMF sees the euro zone’s economic targets for Greece as overly ambitious and the assumptions about reform implementation too optimistic.
The IMF is also at odds with Germany and some other northern European countries over granting Greece more significant debt relief. Berlin wants to retain leverage over Athens and is reluctant to grant it favors that could anger conservative allies of Chancellor Angela Merkel before a federal election in the autumn.
The IMF, which participated in the first two bailouts for Greece, has so far refused to inject funds this time amid the standoff over economic assumptions and debt relief.
Additional reporting by Jan Strupczewski, Francesco Guarascio, Philip Blenkinsop, Michel Rose and Gina Kalovyrna; writing by Michele Kambas; Editing by Noah Barkin and Ralph Boulton