After a busy week of talks with European leaders aimed at securing support for a deal for Greece, Prime Minister Alexis Tsipras faces challenges on the home front amid tensions with SYRIZA over the terms such an agreement would entail.
In a speech to his party’s central committee on Saturday, Tsipras said Greece is “in the final stretch of negotiations” and is ready to accept a “viable agreement” with its creditors but not on “humiliating terms.” He ruled out submitting to irrational demands on value-added tax rates and further labor reform, and called on lenders to make “necessary concessions.”
“We have made concessions but we also have red lines,” he said, claiming that some foreign officials were counting on the talks failing.
Although Tsipras reiterated his commitment to the party’s so-called red lines in negotiations, pressure from within SYRIZA not to capitulate to creditors has grown amid rumors that a deal is in the works. In particular, members of the radical Left Platform led by Energy Minister Panayiotis Lafazanis have refused to approve any deal that departs from the party’s pre-election promises. The faction has been working on a counter-proposal for alternative sources of funding.
Tsipras and other front-line cabinet members, meanwhile, remain focused on a deal by early June when the country’s next debt repayment to its creditors is due.
But as negotiations continue to drag, sources suggest that the likeliest scenario is a two-stage deal despite Tsipras’s recent insistence on the need for a “comprehensive agreement.” The two-stage deal would comprise an initial agreement that would unlock a portion of rescue loans in exchange for some reforms, most likely tax increases, to keep the country solvent; the second part of the deal would tackle the thorny issues of pension and labor sector reform.
Representatives of Greece’s creditors involved in the negotiations have expressed concern about slow progress. Although the two sides have converged on fiscal issues, they disagree on most others. Reports that Greece proposed to tax bank transactions were rebuffed over the weekend by the Finance Ministry.