After submitting new proposals to its international creditors, suddenly things seemed to be looking up for Greece on Monday.
Both the Eurogroup (meeting of European finance ministers) and the emergency summit of European leaders broke up on a positive tone, suggesting that, although a deal isn’t done, the foundations are at least being laid.
Greece needs to unlock its €7.2 billion ($US8.2 billion, £5.16 billion) bailout tranche to make debt repayments due this month and next.
Investors took it as a good sign too: Athens stocks exploded up by 9%, and every major eurozone country’s stock index rose by more than 3%.
But it’s becoming clear that the deal will be at the expense of some of Prime Minister Alexis Tsipras’ ideological purity. Things the radical PM promised not to consider when he was elected on the ticket of Syriza in January seem to be very much on the table now.
Here’s Phillip Inman at the Guardian:
Tackling the towering cost of the Greek pension system was once considered a no-go area. Already cut by his predecessors, Tsipras had ruled out shaving anymore from the bill. Likewise VAT was off the agenda. Now it seems he is prepared to compromise on both issues.
On pensions, Athens appears to have conceded that the government’s coffers must be shielded from a wave of early retirements.
Before this week, the major elements of disagreement between the Troika of creditors and the Greek government were on labour market issues, pensions and austerity — major concessions have clearly been made on pensions, and austerity seems likely to come from higher taxes, if not through spending cuts.
And some of Tsipras’ supporters are already starting to go sour on the contents of the mooted deal.
“I believe that this programme as we see it … is difficult to pass by us,” said Alexis Mitropoulos, deputy speaker in the Greek parliament, speaking to Reuters.
Charles Forelle over at the Wall Street Journal has a great piece looking into the grassroots make-up of Syriza. Here’s a snippet:
It is also uncertain exactly what kind of deal would be acceptable to the left wing of Syriza. The party’s argument that fiscal austerity — steep budget cuts and tax increases — has deepened Greece’s economic slump has been central to its popular success.
Most on the party’s left wing reject any additional pension and wage cuts outright, saying Greek workers have suffered enough in years of depression since Greece’s first bailout.
Syriza managed an impressive degree of unity to climb to power, but the party is a sometimes fractious coalition of different left-wing and socialist organisations — an ideological grouping which has been parodied for its chronic inability to stop splintering into small and ineffective sub-movements.
Many of the Syriza activists and MPs (though not a majority) belong to the Left Platform. In fact, back in 2013 when Tsipras was confirmed as leader, the bloc snapped just less than a third of the seats on the party’s central committee.
The World Socialist Web Site describes the Left Platform as “an amalgam of pseudo-left forces, Stalinists and Maoists,” in which many members were in favour of leaving the euro, or at least keeping the option to do so open. Panagiotis Lafazanis, often identified as a leader of the Left Platform, is now Greece’s energy minister.
Barclays’ George Saravelos has outlined the steps that Tsipras has to take from here — first he must pass the deal through Syriza’s 200-member central committee. Back in May, he defeated a radical proposal to ignore international debt repayment deadlines, but only by 95 votes to 75. If a handful of members change their minds on this issue, another vote would be lost.
And even if he can get the deal past the committee, he has a majority of just 12 in Greece’s parliament, when the Independent Greeks (Syriza’s right-wing but anti-austerity coalition partners) are counted. Much of the rest of the parliament, including the centre-right New Democracy party that previously governed, might vote for a deal. But losing his own backers and relying on his political adversaries could weaken Tsipras considerably.
So even if Tsipras manages to sew up the deal from the perspective of his stern European creditors, he could face a revolt from his own friends and supporters.
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