Finance Minister Euclid Tsakalotos is bracing for a Eurogroup summit on Thursday where he is expected to present a set of concessions on thorny issues that have stalled bailout negotiations in a bid to restart the review so the prospects for debt relief and inclusion in the European Central Bank’s quantitative easing program return to the table.
It remains unclear exactly what Tsakalotos will propose to his peers, though the issues holding up the talks relate to fiscal forecasts, energy and labor relations. With the International Monetary Fund pressing for additional cuts to pensions and a further lowering of the tax-free threshold, Tsakalotos will come under pressure for initiatives in those areas too.
The IMF has yet to determine whether it will join Greece’s third international bailout. Until last week, the government had indicated that the bailout could progress without the Fund’s involvement.
But, since Germany’s powerful Finance Minister Wolfgang Schaeuble made it clear that Berlin would not accept the withdrawal of the IMF, Athens has stopped the tough talk. Facing elections in the fall, Schaeuble is keen to ensure that Greece does not become a domestic problem for him.
Prime Minister Alexis Tsipras meanwhile must achieve a tricky balancing act: endorsing the necessary reforms to ensure Greek bailout talks resume while keeping a lid on discontent with the ranks of his leftist SYRIZA.
Already some radical factions within SYRIZA have reacted negatively to the prospect of further austerity. The Group of 53, to which Tsakalotos belongs, has expressed misgivings while it remains unclear how many MPs would seriously consider destabilizing the government by voting down new measures in Parliament. The growing unease has refueled speculation about the prospect of another round of snap polls.
According to sources, Athens wants to chop up negotiations with creditors to limit the political cost. The plan would be for talks to resume over the coming week, focusing on the final measures that are necessary to conclude the current bailout review. Talks on a midterm program, which were supposed to take place in parallel, would be postponed.