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An unpredictable week for the future of Greece looming large

21 June 2015 / 17:06:08  GRReporter
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Just a few hours of anxiety and responsibility remain for the premier Alexis Tsipras until the crucial tomorrow’s summit in Brussels. As already publicly recognized even by cabinet members, on 25 January Tsipras was not given a mandate to drag Greece out of the eurozone.

In formal terms, the opportunities to bridge the gap between Athens and its partners are not limited to tomorrow's summit. The current bailout programme expires on 30 June, with yet one more regular meeting of the European Council scheduled for the end of this week. Given, however, the charged atmosphere of the Greek prime minister’s relations with all major international players, as well as the pressure on the banking system, it is clear that tomorrow might steer developments in either direction. Even before Eurozone leaders sit at the negotiating table, the Eurogroup will have its meeting aimed at deliberating over the proposals the Greek side was asked to present.

The Greek prime minister and his team must have spent their time since yesterday morning talking away, as the risk of rupture, especially after ‘Donald Tusk’s ultimatum’, is rather succinct. According to sources, while voices ‘for’ the extension of the deadlock during the summit are still being heard within the government team, it is crucial for Athens that the future agreement contains an explicit (rather than fuzzy as in 2012) commitment to begin talks on easing the Greek debt over the coming months. The pill of the agreed measures should also be sweetened with a growth promoting package. In return, the Greek government is ready to accept amendments to its VAT proposal. It might also discuss further measures in respect with revenue collection to overcome its partners’ nervousness over the fiscal gap. The same sources say that the Greek side will fight tooth and nail during the negotiations to avoid pension cuts; it might succumb to whatever equivalent measures are proposed by the creditors. Nonetheless, as intimated by people from Tsipras’ circle, given that Berlin has told Athens that the agreement hinges on immediate changes in the social security system, the prospect of the government backing down to cuts in high pensions is not entirely excluded.

Athens' insistence on the debt issue is based on the notion that without immediate intervention the Greek economy cannot get out of the spiral of revenue-boosting measures. But it is also based on the concern that without debt reduction commitments on behalf of the creditors the rest of the agreement will be swallowed neither by SYRIZA’s parliamentary group nor by the public: if Athens succumbs to the agreement, the bulk of its provisions will most likely fly straight in the face of almost all election ‘red lines’ of the ruling party.

Another big concern for those both in power and in opposition is what kind of political dynamics will be triggered by an agreement or a breakup with the creditors.

The ‘straitlaced’ scenario, which the prime minister has recently mentioned in public, is that the SYRIZA and Independent Greeks government shoulder the responsibility for the decision, whatever it might be. According to this option, Alexis Tsipras will present the agreement first to SYRIZA’s parliamentary group, and subsequently to parliament for ratification. In case the agreement fails one of the two tests, this will lead to early elections, and SYRIZA’s lists will be purged of any dissenters vis-a-vis this policy. According to another scenario, the elections will be voted in parliament, even with the consent of New Democracy, Potami or possibly PASOK, to avoid a situation where the country holds an election amidst its bankruptcy. According to sources, Antonis Samaras has already decided that his New Democracy will vote 'yes' on the agreement to prevent the country's exit from the eurozone. Potami’s leader Stavros Theodorakis has made similar noises.

Given, however, the acute liquidity situation and the unpredictability of developments, as well as the real and present danger that the government of SYRIZA and the Independent Greeks might prove unable to implement the agreement once it is signed, alternative political scenarios have already been making the rounds in the parliament’s wings.

The first one envisages the formation of a government representing all political forces. According to sources, Antonis Samaras is ready to help along these lines and discuss alternative solutions for the premiership. The second scenario involves the creation of another government by the incumbent national assembly, with SYRIZA and Potami joining forces – helped or tolerated by PASOK. In this case Tsipras could stay on as prime minister.

Tags: Alexis Tsipras Syriza negotiations creditors summit scenarios
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