Leftists vent fury over terms proposed for Greek debt deal
Hopes high for agreement but differences remain over tax rises and benefit cuts
Leftists in Greek prime minister Alexis Tsipras’s party vented fury on Thursday at terms proposed by Greece’s creditors for a last-ditch deal to stave off bankruptcy, but European officials voiced confidence that an agreement was near.
Mr Tsipras emerged from late-night talks with senior EU officials in Brussels saying a deal with international lenders was “within sight” and that Athens would make a crucial payment due to the International Monetary Fund on Friday.
He rejected pension cuts and a tax increase on electricity that he said European and IMF creditors wanted among conditions to release €7.2 billion in frozen loans and avert a default that could hit euro zone and world markets.
European Commissioner for economics and taxation affairs Pierre Moscovici said he was convinced an accord would be reached, adding: “I am optimistic, but there is still a way to go.” French finance minister Michel Sapin told Reuters: “It’s not yet signed, but it’s progressing.”
An EU spokesman said European Commission president Jean-Claude Juncker, who hosted Mr Tsipras for dinner on Wednesday at the EU executive’s headquarters along with the chairman of euro zone finance ministers Jeroen Dijsselbloem, would reconvene their meeting in the coming days. He declined to say when.
Mr Juncker cut short a meeting with a group representing EU regions on Thursday saying he had got only three hours sleep and had “to prepare the next round of negotiations”.
A Greek government official told reporters that Athens hoped to wrap up the talks by June 14th, leaving just enough time for national parliaments in Germany and elsewhere to approve the aid disbursement. He also said Greece aimed to incorporate more elements of its own rival document in a final agreement.
Backlash in Athens
As partial details of the lenders’ proposal leaked out, members of Mr Tsipras’s government and his Syriza party denounced the conditions as “murderous” and unacceptable.
The backlash highlighted the risk of a split in Syriza if the prime minister decides he has to accept the deal, not least because a big majority of Greeks want to stay in the euro zone.
“[Juncker] took on the dirty work and conveyed the most vulgar, most murderous, toughest plan when everyone hoped that the deal was closing,” Alexis Mitropoulos, a deputy parliament speaker and senior official within Syriza, told Mega TV.
“And that at a time when we were finally moving towards an agreement we all want because we rule out a rift leading to tragedy.”
Avgi, the Syriza party newspaper, headlined Thursday’s edition: “A continuation of austerity? No, thanks!”, while the top-selling centre-left daily Ta Nea splashed: “Death toll required for an agreement.”
Some in the ruling party have said Mr Tsipras could call early elections or a referendum if he had to accept a deal that crossed Syriza’s “red lines”.
But finance minister Yanis Varoufakis, who has been sidelined from the Brussels talks, said he saw “no reason whatsoever” to go to elections since the people had given the government a clear mandate.
Mr Tsipras dismissed talk that Athens might skip a €300 million repayment to the IMF due on Friday, telling reporters: “Don’t worry about it. We have already paid €7.5 billion, so we will continue.”
Conservative opposition leader Antonis Samaras, who led the government that implemented much of Greece’s bailout before being defeated in January, urged Tsipras not to call elections but to seek a national consensus on the negotiations.
With Europe’s big powers and the US concerned about the unpredictable outcome as Greek reserves shrink toward zero, the creditors did signal some willingness to compromise, notably by lowering the budget surplus Athens will be required to run before debt service payments.
Sources familiar with the proposal said they now sought a primary surplus of 1 per cent of gross domestic product this year and 2 per cent next year. Greece has offered 0.8 per cent this year and 1.5 per cent in 2016.
Mr Tsipras reprised the positive tone he has taken since he secured a four-month extension of a bailout package in February.
“I believe an agreement is in sight,” he said. “But we need to conclude the discussions with a realistic point of view,” he added, making clear his reservations.
“We are very close to an agreement on the primary surplus. That means all sides agree to go further without tough austerity measures of the past,” the prime minister said.
He also again ruled out scrapping a supplement for low-income pensioners or a value-added tax change that he said would raise the tax on electricity by 10 percentage points.
Mr Juncker, whose institution is not itself a creditor, has been active in trying to broker a deal and has ruled out Greece leaving the euro zone - an outcome many EU officials fear would undermine the long-term stability of the currency.
Euro zone finance ministers, wary of their own voters who are fed up with bailing out Greece, are keen to avoid Athens exploiting divisions between hawks and doves among negotiators.
Mr Tsipras, whose government has been critical of a hard line from the IMF, again praised Mr Juncker’s executive for showing understanding of the Greek predicament.
On Wednesday, Mr Tsipras agreed in his third telephone call in a week with German chancellor Angela Merkel and French president Francois Hollande on the need for an immediate solution involving a lower primary budget surplus target for Greece.