Greece’s ruling Syriza party has rounded on the country’s international lenders, accusing them of jeopardising efforts to avert a Greek default by pressing for politically sensitive concessions from Athens.
Substantial gaps remained between Greece and the EU-IMF troika as the clock ticked towards a June 30th deadline by which Athens must repay €1.6 billion to the IMF. If that payment is to be made, Greece will have to put the agreed measures through its parliament by Monday so that some other euro zone parliaments can endorse the deal and unblock aid funds.
Syriza would also need time to convince wavering MPs to support the package after leaks of the Greek side’s proposals for ending the standoff stirred a backlash within the party this week.
If Greece misses the June 30th payment and is declared in default to the IMF, it could trigger a bank run, capital controls and an eventual Greek exit from the euro zone.
State minister Alekos Flabouraris, considered close to prime minister Alexis Tsipras, told Syriza party's political committee the creditors' revised list of demands was "absurd", according to reports. "Greece is ready to agree, but not to kneel and be humiliated," tweeted Syriza MEP Dimitrios Papadimoulis.
The Greek side had initially expected a deal to be concluded yesterday. As he prepared to travel to Brussels with Mr Tsipras, finance minister Yanis Varoufakis said Greece was in the "final stretch" of negotiations and sounded an optimistic note about the prospects for a deal.
Fraught atmosphere
As the scale of the revisions sought by the lenders became clear, however, the atmosphere grew fraught. Mr Tsipras hit out at the "strange position" of "certain" creditors – a swipe at the IMF – just minutes before he departed for Brussels for a meeting with IMF chief Christine Lagarde, ECB president Mario Draghi and senior EU figures. "The repeated rejection of equivalent measures by certain institutions never occurred before – neither in Ireland nor Portugal," Mr Tsipras tweeted.
“This strange position maybe hides two things: either they do not want an agreement or they are serving specific interests in Greece.”
The more concessions Mr Tsipras makes, the more resistance he will face in parliament and on the streets, where a series of recent protests, some organised with Syriza’s support, have underlined public opposition to yet more belt-tightening.
Among the many unresolved issues, according to leaks of the EU-IMF counter-proposals, were corporate tax, pension reform, VAT and labour laws. The IMF was uneasy with the Greek proposals’ emphasis on tax increases.
Debt relief
Also in dispute were Mr Tsipras’s demands for a pledge on debt relief – seen in Athens as a key to limiting the number of defections or abstentions when the package comes to a parliamentary vote. Euro zone leaders say they do not want to address an easing of the Greek debt burden at this stage.
Mr Tsipras must assuage concerns on the left wing of his party about any deal that commits to further austerity. If he were to lose more than 10 Syriza deputies he would need votes from pro-European opposition parties to push the deal through parliament. That would damage the coalition’s prospects for survival and could hasten a fresh general election.
The Syriza leadership must also keep its junior coalition partner, the Independent Greeks, onside. Greece’s creditors were reported yesterday to have sought the removal of special VAT rates for residents of the Aegean islands – the retention of which has been a key demand of the Independent Greeks.
“I could not vote for such a measure, nor, obviously, could I participate in a government violating a line on which we received a mandate from the Greek people,” the junior party’s leader, Panos Kammenos, said.
