Tsipras secures domestic backing for last-gasp effort at deal

TAGS: Euro, Politics, Referendum

Greece’s new Finance Minister Euclid Tsakalotos and Prime Minister Alexis Tsipras travel to Brussels on Tuesday with the aim of keeping the country in the eurozone but with most of its partners seeming to have decided that an exit would be more preferable.

Tsakalotos was sworn in on Monday night after replacing Yanis Varoufakis at the Finance Ministry. The outgoing flamboyant economist said he was stepping aside to assist Tsipras’s efforts to reach an agreement with lenders.

Tsipras took part on Monday in a meeting of political leaders chaired by President Prokopis Pavlopoulos. The heads of all the parties (bar Golden Dawn’s Nikos Michaloliakos) discussed the government’s plans for securing a deal with the institutions for several hours.

Sources said that Tsipras informed his counterparts that the coalition would propose a deal based on the most recent set of proposals published by the European Commission.

The premier is thought to have said Athens will also ask for the more gradual implementation of some measures.

It is not clear if the government is willing to add to this set of proposals, which could prove a stumbling block as the deterioration of the economy, which has been accelerated by capital controls, means that a larger fiscal adjustment is needed.

Following the meeting, all the leaders who took part (with the exception of the Communist Party’s Dimitris Koutsoubas) signed a joint statement insisting that they want Greece to remain in the eurozone.

“The recent verdict of the Greek people is not a mandate for rupture, but a mandate to continue and strengthen the effort to reach a socially fair and economically viable deal,” the parties said in the statement, which also called for liquidity to be restore to the banking system and discussions about debt relief to begin.

Tsipras also spoke on the phone on Monday to German Chancellor Angela Merkel, International Monetary Fund Managing Director Christine Lagarde and European Central Bank President Mario Draghi.

Varoufakis, a controversial figure since his appointment in January, will not be part of the negotiations following his resignation on Monday morning. “Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners,’ for my... ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement,” Varoufakis wrote on his personal blog yesterday morning.

His successor, the more mild-mannered Tsakalotos, admitted that he faces a daunting task. “I cannot hide from you that I am quite nervous. I am not taking on this job at the easiest point in Greek history,” he said during last night’s handover ceremony.

According to sources in Brussels, 16 of the other 18 countries in the eurozone are in favor of letting Greece leave the eurozone and they will have to weigh up the cost of any agreement to keep Athens in the single currency.

Merkel, who was in Paris on Monday to discuss the Greek crisis with French President Francois Hollande ahead of Tuesday's meeting of eurozone leaders, said she expected Athens to present reform proposals to creditors without delay.

“It will be important tomorrow that the Greek prime minister tells us how things should proceed and what precise suggestions he can submit to us for a medium-term program that will lead Greece to prosperity and growth again,” Merkel said, adding that “time is of the essence.”

Merkel’s spokesman Steffen Seibert appeared less conciliatory, saying that the conditions are “not there at present to enter negotiations on a new program.” He said the “no” vote in the Greek referendum opposed the principle that “solidarity requires countries to take responsibility.”

Hollande struck a similar tone to Merkel’s, saying “the door is open for discussion” and calling on Tsipras to offer “serious, credible proposals so that this willingness to stay in the eurozone can translate into a lasting program.” The French leader stressed that “time is running out and there is urgency, urgency for Greece and urgency for Europe.” He added that although there is room for solidarity in Europe, “there is also a balance between responsibility and solidarity, which must be our course of action in the coming days.”

France’s Finance Minister Michel Sapin suggested that Paris would support debt relief for Greece if Tsipras presents “serious” conditions for a new bailout package.

Spanish Prime Minister Mariano Rajoy said he was in favor of further aid for Greece but not without “responsibility” and reforms from Athens. “What matters is that Greece knows we are willing to help... but the key is that in exchange the reforms necessary for growth and job creation are carried out,” Rajoy said.

In Brussels, meanwhile, European Commission Vice President Valdis Dombrovskis told reporters that there was no easy way for Greece to emerge from its crisis and the referendum result had broadened the gap between Greece and other eurozone countries. Still, he expressed very cautious optimism. “If all sides are working seriously, it’s possible to find a solution, even in this very complicated situation.”