A faction inside Greece's government wants to ally with Russia and go back to the drachma

Alexis TsiprasREUTERS/Francois LenoirGreece Prime Minister Alexis Tsipras.

Just when you thought Greece was getting its act together the government there has found a new way to fall apart. Prime Minister Alexis Tsipras successfully shepherded a new round of reforms through the Athens parliament last night, on a vote of 230-63. Those reforms are necessary if Greece is to receive the €86 billion debt bailout package it has been offered.

But Tsipras is losing the far-left wing of his leftist Syriza coalition, which has belatedly figured out that Tsipras’ bailout negotiations have been a disaster. Those leftists want a return to the drachma and closer ties with Russia, according to Ekathimerini, the Greek news service.

To recap: Tsipras faced down the EU and the IMF, which was insistent that Greece repay its debts. He held a referendum in which the country rejected the deal, and he expected the EU to blink and back down. But German chancellor Angela Merkel simply shrugged it off. Back at the bargaining table, with Greek banks shut down for more than a week and the economy in decline, Tsipras was forced to accept an even worse debt package than he had been offered before the vote.

Greece Panagiotis LafazanisREUTERS/Yannis BehrakisGreece’s former Energy Minister and head of the far-left flank of ruling Syriza party Panayotis Lafazanis arrives for a ruling Syriza party parliamentary group session in Athens, Greece.

An article on the web site of The Left Platform (part of Syriza) argues that Tsipras was a fool to not have a Plan B in case the EU didn’t back down after the referendum:

“When did the prime minister actually realise that there was no alternative solution? If he knew it from the beginning, why didn’t he sign a much more lenient agreement in February?” the author of the article asks. “Why was he talking until just the other day about cancelling the memorandums? Why did he take the decision to hold a referendum?”

The Financial Times points out that Greece is heading into a general election in September, and the Left Platform may break from Syriza and argue that Greece should leave the euro and use a new drachma instead. The Left Platform is led by Panayotis Lafazanis, former energy and environment minister. The FT says:

Mr Lafazanis and his backers argue that “Greece doesn’t need the euro”, claiming it could make a swift recovery by adopting a “new drachma” as its currency, expanding the state’s involvement in the economy and building closer ties with Russia.

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