ATHENS – As it has for weeks without being right yet, Greece’s government said it as confident a deal would be reached soon with international lenders.
With critics accusing Prime Minister and Radical Left SYRIZA Alexis Tsipras of fabricating deals that don’t materialize, the troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is holding back a 7.2-billion euro ($7.91 billion) installment.
That’s almost the left of what’s left of 240 billion euros ($263.81 billion) of two bailouts begun in 2010. With Greece essentially broke and locked out of markets by prohibitively high interest rates, Tsipras either has to impose austerity measures he campaigned against or risk a default and possible Eurozone exit for the country.
Greece on Feb. 20 was given a four-month bailout extension on condition it produce a credible list of reforms but has done almost nothing since apart from criticizing and blaming the lenders.
Tsipras and an array of SYRIZA officials the past few weeks kept making predictions of an imminent deal – the latest that it could come on May 31, but troika officials essentially said those were self-serving announcements without a shred of credibility.
Required to make a 300-million euro ($329.76 million) payment to the IMF on June 5 and with its bailout extension running out the end of the month, Greece is in a tough spot although the governments keep optimistically saying a deal is at hand when it isn’t.
DOES ANYBODY HAVE A PLAN?
“We believe that we can and we must have a solution and a deal within the week,” Interior Minister Nikos Voutsis, who is not involved in Greece’s talks with the lenders, told SKAI TV.
“Some parts of our program could be pushed back by six months or maybe by a year, so that there is some balance,” he said, showing signs that SYRIZA and Tsipras are willing to bend on campaign promises to reverse austerity measures that came with the bailouts.
Tsipras also keeps saying he has red lines he won’t cross, including cutting pensions again and refusing to reverse his plans to restore collective bargaining and raise the minimum wage.
Voutsis said there has been agreement on some issues, such as achieving low primary budget surpluses in the first two years. But they still disagreed on a sales tax, with Greece pushing so any VAT hikes will not burden lower incomes.
“A powerful majority in the political negotiations has showed respect for the fact that there can’t be further austerity strategies for the Greek issue, the Greek problem and the Greek people,” he said, contradicting troika officials who said that’s not the case.
The debt stand-off overshadowed a meeting of policymakers from the Group of Seven rich nations in Dresden, Germany on May 30.
The United States warned of a possible accidental default if Greece and the troika don’t deal, which could cause a big ripple in world markets and shake the 19-country Eurozone.
In an interview with Realnews newspaper, Economy Minister George Stathakis said Athens had no alternative ideas.
“The idea of a Plan B doesn’t exist. Our country needs to stay in the Eurozone but on a better organized aid program,” he said.
Stathakis also was confident a deal will be reached without saying why. “Otherwise, mainly Greece but the European Union as well will step into unchartered waters and no-one wants that,” he said.
The Athens News Agency reported that government officials attending an emergency summit with Tsipras on May 30 prepared a draft agreement that offered a deal on Value Added Tax (VAT), curbing early retirements and the gradual merging of pension funds.
ANA said that the draft deal will likely be presented during a new teleconference between Tsipras, German Chancellor Angela Merkel and French President Francois Hollande on May 31. Tsipras asked their backing to break the troika deadlock. Germany is the biggest contributor to Greek rescue packages.
Greece is expected to top a June 1 meeting between Merkel, Hollande and European Commission President Jean-Claude Juncker and that Tsipras might attend.