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28/09/2016

Tsipras clashes with Syriza’s drachma supporters

Euro & Finance

Tsipras clashes with Syriza’s drachma supporters

No withdrawals here. Vandalized ATM, Syntagma Square.

[Tilemahos Efthimiadis/Flickr]

Prime Minister Alexis Tsipras attacked radical members of his own party who oppose the deal for a third bailout, making it clear that a return to the drachma is not in the cards. EurActiv Greece reports.

During the tough negotiations at the last EU summit (12 July) on Greece’s EU future, Alexis Tsipras was finally forced to abandon his anti-austerity rhetoric and accept a cash-for-reforms deal which has to get through the Greek parliament today (15 July). 

The adoption of painful reforms has triggered strong reactions within Syriza, with its radical left faction threatens to vote against it and put into question coalition government’s stability.

>>Read: Tsipras faces Syriza revolt

‘Bad day for Europe’

In an interview with Greece’s state TV broadcaster ERT, Tsipras spoke at length about the reasons he finally backed down.

“Sunday’s EU summit was a bad day for Europe. It was a defeat for Europe,” he stressed.

The premier also said that the agreement was the result of strong pressure on a country and on a people who had a different opinion, emphasising that the attitude of the EU partners did not honour the traditions of a democratic Europe.

Tsipras admitted, though, that he has had illusions that “this Europe can be defeated” and that he was proved wrong that “the power of a people can defeat the power of the banks”.

Fresh polls published late yesterday by Kapa Research found that 72% of Greeks surveyed thought the Brussels deal was necessary. The shift of mood after 5 July, when over 61% of Greeks voted against the creditors’ proposals, is difficult to explain, but certainly the fear that the banks would remain closed influenced public opinion.

Tsipras said the Brussels deal meant ordinary Greeks’ savings were safe, but added that the reopening of the banks – which have been closed for over a week – depended on the finalising of the deal, which could take a month. Not only the Greek parliament, but also the Bundestag, and some other eurozone legislatures will have to ratify the agreement.

The European Central Bank has been keeping Greek banks afloat with emergency liquidity, but it could be forced to cut off that aid if Greece misses a huge debt repayment due on Monday (20 July).

The drachma plan

Referring to scenario of returning to the drachma, Tsipras said this was not Syriza’s objective.

“This is not a leftist choice,” he said.

He also stressed that Greece had never had alternative funding opportunities outside of Europe.

“The country does not have foreign exchange reserves for a national currency. Wherever I went these 5 months, in Russia, in the US I talked with President Obama, with the Chinese premier: no one told me ‘Go ahead with this option and we will help you’,” he stated.

In the meantime, radical members of Syriza met yesterday (14 July) at a hotel in Athens, in an effort to adopt a joint approach to today’s crucial parliament vote.

Panagiotis Lafazanis, the energy minister who also leads Syriza’s radical faction, spoke again in favour of returning to the drachma.

“Our roadmap is to go to a national currency. This is what we should have already done, or we can do now,” he said.

“We can get €22 billion from the Bank of Greece to pay wages and pensions, and in the meantime we can use the time to issue our own currency,” he added.

It remains unclear how such a huge amount could be made available. Media report Greek banks have less than one billion euros left in their coffers.

Costas Lapavitsas, another influential radical left MP, allegedly said that he had a plan to return to the drachma, which he had already presented to the Greek premier.

According to press reports in Athens, far-left Syriza MPs will either abstain or vote against the EU deal in tonight’s parliament vote. They also made it clear that no one was intending to resign “as they don’t wish the breakup of Syriza”.

The day after

The EU deal will most probably pass through the Greek parliament with the support of the majority of opposition parties.

But the day after the crucial vote on the EU deal in the parliament looks quite uncertain for Greek politics.

The centre-right New Democracy (EPP), the centrist Potami (S&D) and the Pan-Hellenic Socialist Movement (Pasok-S&D) have announced they would vote in favour.

Supportive of the EU agreement is Syriza’s junior coalition partner, the Independent Greeks party, despite its initial hesitation.

Analysts estimate that Syriza may have 30 to 40 defections from its radical faction.

Taking into account that radical MPs are not intending to resign, and that it’s not in Tsipras’ “culture to delete party members”, Syriza’s unity looks uncertain.

“I will do whatever is needed to keep the unity of my party,” Tsipras said.

Tsipras and Panos Kammenos, the leader of Independent Greeks, have also ruled out the scenario of a “special purpose” government, with the participation of unelected and widely accepted people.

Opposition parties have said that they would be more comfortable with such a government, but made it clear they would not participate in one.

Civil servants are set to stage a 24-hour strike today, the first such action since Tsipras took power in January.

EurActiv Greece understands that the opposition parties want to distance themselves from the tough EU deal and let Tsipras assume political responsibility for it.

A possible scenario is that Tsipras would pass the deal through the parliament, and then proceed to a reshuffle of the government, replacing radical ministers.

A possible breakup of Syriza during this summer will probably lead to national elections in September and bring Tsipras’s camp closer to S&D.

Forming a pro-EU government with the participation of all Greek left-wing parties has always been a top objective for the European Socialists.

Syriza has 149 seats out of 300 in the Greek parliament, while its junior coalition partner, the Independent Greeks, 13. The main opposition center-right New Democracy has 76 MPs, centrist (left leaning) Potami and far-right Golden Dawn 17, the Communists (KKE) 15 and the Pan-Hellenic Socialist Movement (Pasok) 13.

Background

Eurozone leaders reached an agreement on a programme to save Greece from bankruptcy after 17-hour talks on 13 July.

>> Read: Eurozone reaches ‘laborious’ tentative deal on Greece

If approved, this will be the third rescue programme for Greece in five years. It will be managed by the European Stability Mechanism (ESM), the eurozone permanent crisis resolution fund that was initially set up five years ago in an effort to save Athens from bankruptcy.

Here is a look at what Greece must do:

  • Request continued support from the International Monetary Fund after its current IMF program expires in early 2016.
  • Streamline consumer tax and broaden the tax base to increase revenue. Laws on this are due by Wednesday.
  • Multiple reforms to the pension system to make it financially viable. Initial reforms are due by Wednesday, others by October.
  • Safeguard the independence of the country's statistics agency.
  • Introduce laws by Wednesday that would ensure "quasi-automatic spending cuts" if the government misses its budget surplus targets.
  • Overhaul the civil justice system by July 22 to make it more efficient and reduce costs.
  • Carry out product market reforms that include allowing stores to open on Sundays, broadening sales periods, opening up pharmacy ownership, reforming the bakeries and milk market and opening up closed and protected professions, including ferry transport.
  • Privatize the electricity transmission network operator unless alternative measures with the same effect can be found.
  • Overhaul the labour market. This includes reviewing collective bargaining, industrial action and collective dismissal regulations.
  • Tackle banks' non-performing loans and strengthen bank governance.
  • Significantly increase the privatization program, transferring 50 billion euros worth of Greek assets to an independent fund, based in Greece, to carry out the privatizations.
  • Modernize, strengthen and reduce the costs of Greek administration, with a first proposal to be provided by 20 July.
  • Allow members of the three institutions overseeing Greece’s reforms - the European Central Bank, IMF and European Commission, previously known as the 'troika" - to return to Athens. The government must consult with the institutions on all relevant draft legislation before submitting it to public consultation or to parliament.
  • Re-examine, with a view to amend, legislation passed in the last six months that is deemed to have backtracked on previous bailout commitments.

Timeline

  • 15 July: Greek parliament votes the Brussels aid-for reform deal and reform package;
  • 15 July: French Parliament to vote to give the Commission a mandate for a third bailout;
  • 16 or 17 July: Austrian parliament votes;
  • 16 July: Estonian parliament votes;
  • 17 July: The Bundestag votes.

Dates unclear: Finnish and Latvian parliament will vote