PM faces Merkel amid race to detail reforms

As government officials scramble to draft a list of detailed reforms in line with demands by the country’s international creditors, Prime Minister Alexis Tsipras is due in Berlin on Monday for crucial talks with German Chancellor Angela Merkel as concerns grow about Greece’s dwindling cash reserves.

In a statement to Sunday’s Kathimerini, Tsipras said the meeting was an opportunity for the two leaders to talk without pressure. The meeting “will not be pressurized by negotiations,” the premier said. “And this is very significant because we can both discuss the important issues that are burdening Europe as well as improving bilateral relations between the two countries.”

Tsipras highlighted a “unique opportunity to pursue changes which previous governments did not dare to attempt, either because they were committed to powerful interests or because they did not have popular support.”

Despite the premier’s optimistic tone, the challenge he faces is tough and multi-faceted. First of all, despite his reassurances that Greece will meet all its obligations, the state is running out of money. Greece needs an estimated 1.5 billion euros to meet its obligations for March and 2 billion euros for April. Sources indicated that officials have found a way of covering obligations for this week but the outlook from then onward is unclear. Greek officials are said to be considering a range of options. One of those is the use of IOUs for the payment of salaries and pensions. There is also the possibility of tapping the reserves of pension funds, state bodies and utilities, though the institutions in question appear reluctant to oblige.

Meanwhile Tsipras’s government is under renewed pressure to prepare a raft of reforms, based on a list sent to creditors by Finance Minister Yanis Varoufakis that formed the basis of the February 20 Eurogroup agreement, with details of the projected fiscal impact of the measures. Apart from securing the approval of eurozone finance ministers when they convene – most likely over the coming week – those measures must also be voted through Greece’s Parliament, meaning that Tsipras must gain the backing of far-left critics within SYRIZA who have opposed many of the proposed measures to date. Bills voted through the House last week, providing a raft of anti-poverty measures and a payment plan for tax debtors, gained widespread support but it is unclear whether more controversial reforms will win approval as easily.

The premier did jump an initial hurdle, however, after tough talks with top European officials at last Thursday’s mini-summit in Brussels, which appeared to ease rising tensions between Greece and its eurozone counterparts and produced a joint statement of intent to honor the terms of the February 20 agreement. As expected though, despite underlining the critical nature of Greece’s state finances, Tsipras failed to secure a commitment for the release of liquidity, with European Central Bank President Mario Draghi maintaining his tough stance opposite Greece and on the need for concrete progress on reforms before financial restrictions are eased.

According to sources, the Greek premier succeeded in winning back some of the trust lost by Greek officials over the past few weeks. But the mini-summit in Brussels did not start well, the sources said, noting that Tsipras initially insisted on funding without offering anything substantial in return. The Greek premier was said to be unhappy about Eurogroup President Jeroen Dijsselbloem participating in the mini-summit, probably because of the latter’s recent comments suggesting that capital controls could be imposed on Greek banks, as happened in Cyprus in 2013, if the situation worsened.

Tsipras was said to have taken Draghi to task, claiming that the ECB has not done enough to boost liquidity in Greece, prompting the ECB chief to respond that it is not his problem if Greeks are withdrawing their savings from banks due to a sense of insecurity. According to sources, Draghi also described as “unacceptable” the behavior of Greek officials to technical staff representing the creditors who are forced to work in hotels as Athens objects to them visiting ministries for fact-finding.

Even the usually mild-mannered European Commission President Jean-Claude Juncker is said to have warned Tsipras over a barrage of inflammatory statements by Greek officials, urging the premier to ensure that his ministers do not create an anti-European climate in the country.

An official who was privy to the talks described the meeting as “very educational” for Tsipras, noting that the latter gained a better understanding about how the institutions lending to Greece operate and what their limits are.

“It was made clear to him that you will either continue with reforms immediately or you will chose the road toward Grexit,” the official said.

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