Ahead of election, Syriza poses as guarantor of bailout deal

A sale of the Port of Piraeus would be Greece's largest privatisation deal. [Greek Reporter]

A major sell-off of Greek public assets promised as part of its huge international bailout will go ahead as planned, outgoing Greek Economy Minister Georges Stathakis said on Wednesday (26 August), despite looming snap elections.

“The agreed arrangements have been agreed and will be applied,” Stathakis told reporters in answer to a question on the planned privatisation of Piraeus port, the national railway company and a string of other ports and airports.

Prime Minister Alexis Tsipras resigned last week after his acceptance of an €86 billion rescue package for Greece’s stricken economy triggered a major rebellion within his radical left Syriza party.

>> Read: Tsipras resigns, calls for September election

Elections are now likely to be held on 20 September, just eight months after Syriza stormed to power on a wave of popular anger over tough austerity measures demanded by Greece’s creditors in exchange for two previous bailouts.

Greece pledged to take on a major privatisation programme as part of the latest bailout, which also saw Tsipras agreeing to tax rises, spending cuts and sweeping economic reforms in exchange for the much-needed cash, incensing the Syriza rebels, who have now formed their own party.

The privatisations are expected to raise some €50 billion by the end of 2017, half of which would be used to recapitalise Greek banks, whose cash reserves have been drained of billions of euros by anxious customers.

Upon coming to power, the Syriza government froze several privatisation projects that are now being relaunched, including the concession of more than a dozen key regional airports to Germany’s Fraport-Slentel consortium in a deal worth €1.23 billion.

>>Read: Greece approves first privatisation deal under Syriza

Greece’s election date is to be officially announced by President Prokopis Pavlopoulos by the end of the week.

Capital controls were imposed in early July in a bid to save Greece’s financial system from collapse, but Stathakis said he expected these to be lifted “very soon”.

Restrictions on the amount people can withdraw from cash machines will be relaxed “if banks’ liquidity continues to improve”, he added.

Tsipras softens stand on debt

In the meantime, Tsipras signalled yesterday he would accept an easing of Greece’s huge debt burden if he wins the elections, without any of the write-offs he has long demanded.

Tsipras told Alpha TV that he favoured longer repayment periods and lower interest rates on the debt, now that Greece has secured the new bailout.

But in the interview, he made no mention of writing off any debt – a campaign promise when he was elected in January that Germany, the biggest contributor to Greece’s three bailouts since 2010, opposes.

With his radical left Syriza party split over the latest bailout, Tsipras heaped praise on Finance Minister Euclid Tsakalotos, and rejected the possibility that his ally may not even run in the election.

Tsipras has long argued Greece cannot repay all its debt and needs part of it cancelled to return to long-term economic growth after a depression, a view shared by many mainstream economists and possibly even the International Monetary Fund.

But on Wednesday he appeared to change tack on debt write-offs, raising only the scenario of “an elongation of maturities and a lowering of the interest rates”.

“We will have what economists call fiscal space to repay the debt. This would be the first step for us to return to the markets and regain their trust, if of course simultaneously we have managed to return to positive rates of growth,” he said.

While Syriza wants an outright majority – something it narrowly missed in January – the strength of its support is unclear due to a lack of surveys by leading pollsters in the past month when much has changed. Last week, 25 out of Syriza’s 149 lawmakers walked out to form a new anti-bailout party.

Will Tsakalotos run for Syriza?

The defection has done nothing to heal the rift in Syriza. Many of the 43 lawmakers who refused to back the bailout in parliament remain in the party, at least for the time being.

But more seriously, there are also misgivings among members of Syriza’s mainstream “53+” faction, including lawmakers who reluctantly backed the bailout for the sake of the party and the nation.

These include Tsakalotos, the British-educated economist who clinched the deal, and former government spokesman Gabriel Sakellaridis, members of the faction said. “Neither Tsakalotos nor Sakellaridis have yet made clear whether they will run in the upcoming election,” a member of the faction told Reuters.

Tsipras signalled he had won them over, saying both would run for Syriza. “Euclid Tsakalotos has done a marvellous job and it’s true that if he wasn’t for him, we wouldn’t have achieved a deal,” he said.

This warmth contrasted to the scorn he poured on his previous finance minister, Yanis Varoufakis, who became a cult figure among anti-austerity campaigners across Europe for attacking the eurozone establishment.

Tsipras recalled one session of particularly tough negotiations in June – just before he closed Greek banks for three weeks to save them from collapse – with IMF chief Christine Lagarde, European Central Bank head Mario Draghi and European Commission President Jean-Claude Juncker.

“Varoufakis was talking but nobody paid any attention to him. They had switched off, they didn’t listen to what he was saying,” said Tsipras. “He had lost his credibility.”

Tsakalotos has won the trust of his fellow eurozone finance ministers despite his left-wing views. But he has yet to confirm his candidacy in the election.

Under the Greek political system, Tsakalotos could still serve in a future government even if he is not a member of parliament. But if he failed to run for Syriza, this would be a blow to Tsipras who needs the “53+” faction if he is to hold the party together, win the election and implement the bailout programme.

President Pavlopoulos has asked a conservative and the leader of the new anti-bailout party to try to form a new government, but the former has already failed and the latter is due to give up formally on Thursday.

The official at the presidency stressed that the timetable could still change, but Pavlopoulos intended to appoint a caretaker premier, Supreme Court judge Vassiliki Thanou, on Friday (28 August), and call the election. Thanou would become Greece’s first female prime minister, but only until a new government is formed. 

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