Greek PM says people may have to rule on creditor deal [Update]

Prime Minister Alexis Tsipras said Greek voters could be asked to decide on whether to approve an agreement with creditors that may not be in line with his campaign pledge to end austerity.

In a late-night interview on Star TV on Monday, Tsipras said his mandate is to negotiate an accord with euro-area member states and the International Monetary Fund “that won’t repeat the vicious circle of austerity, misery and pillage; a solution with prospects and within the European framework.”

If the deal “exceeds that mandate,” then “Greek people will have to decide, obviously not through elections,” he said when asked about the possibility of a snap poll or a referendum.

The 40-year-old leader of Greece’s anti-austerity coalition said he’s confident things won’t reach that point, pointing out that Greece’s place in the euro-area is a “deeply existential issue for Europe, with geopolitical implications.”

His comments come after months of talks made little progress in breaking the deadlock between Greece and its institutional creditors, raising the specter of a debt default and the country’s possible exit from the euro.

In a wide-ranging interview that lasted well over 2.5 hours, the premier lashed out at Eurogroup President Jeroen Dijsselbloem and the European Central Bank, accusing them of treating Greece unfairly and breaking promises.

While showing his willingness to compromise with euro-area partners, he pointed to steps taken by European institutions that he said had worsened the situation in Greece. The region’s most-indebted nation is struggling to crawl out of a more than five-year-old debt crisis that shrank its economy by a quarter and put more than a million Greeks out of work.

ECB criticized

“On February 18, the ECB took a decision which was politically and ethically unorthodox,” Tsipras said. “It was a decision to put a ceiling of 9 billion euros on the amount that Greece’s systemic banks can hold in t-bills, while the normal ceiling is 15 billion.”

According to Tsipras, this decision meant that Greek lenders lost their ability to refinance an additional 6 billion euros in short-term government debt.

He said Dijsselbloem had offered reassurances that as soon as the country extended its bailout agreement beyond February — which it did — this ceiling would be eliminated.

Finance Minister Varoufakis received similar promises from his colleagues in the Eurogroup, which Dijsselbloem chairs, Tsipras said. Those pledges were then not honored, he said.

“Our mistake was that we left these at oral promises and didn’t ask for a written commitment,” he said.

Merkel’s position

The late-night interview came as Greece struggles to amass cash to pay pensions and state employees’ wages by month-end. The country is counting on deposits of reluctant local governments, cities and other funds to meet its obligations to retirees and civil servants this week, after euro-area finance ministers on Friday said they won’t disburse more aid until bailout terms are met.

Depleting state coffers will be further strained on May 6, when Greece needs to find 200 million euros for a payment due to the IMF.

The premier said he’s confident German Chancellor Angela Merkel wants to find a solution out of the logjam, saying a default by the country would mark a failure for Europe.

“A Greek default and a rupture would be a failure for Europe, for Merkel and for Greece itself,” Tsipras said. “The German chancellor is willing to find a solution for Greece.”

Greece’s bailout negotiating team met in Athens late Monday to prepare ground for a piece of legislation based on proposals discussed with its creditors aimed at unlocking bailout funds.

Varoufakis sidelined

The officials met to discuss a potential bill that will include Greek proposals presented during the talks with its creditors, the country’s finance ministry said in e-mailed statement. The bill will include changes to the country’s taxation and administration, and will also address fiscal matters, the ministry said.

Another move on Monday that appeased creditors was a government plan that reins in Varoufakis, who has drawn criticism from euro-area partners for his handling of the bailout negotiations.

A Eurogroup meeting in Riga, Latvia on Friday descended into name-calling as the currency bloc’s finance ministers hurled abuse at their Greek counterpart, accusing Varoufakis of being a time-waster, a gambler and an amateur.

In its Monday reshuffle, the government handed over the coordination of the day-to-day efforts to strike a deal with creditors to Deputy Foreign Minister Euclid Tsakalotos. Varoufakis’s role will be limited to supervising the political negotiations with euro-area member states and the IMF.

Greek shares rallied Monday after the reshuffle announcement, with the benchmark Athens Stock Exchange closing the day up 4.4 percent. Bonds rose, with the yield on 3-year notes falling 399 basis points to 22.32 percent.

“I will admit that there is a negative climate,” Tsipras said when asked about the finance minister’s relations with his peers. “They definitely don’t want to deal with Varoufakis,” he said, adding that the finance minister is “an asset.”

The prime minister said the government is doing all it can to show that Greece is willing to make the compromises needed to reach an accord with its creditors.

“The negotiations are in the most crucial stage, the final stage,” he said. “We are making great efforts to cover the distance to reach an agreement. As I said in Brussels, we have covered 70 percent of the distance and we ask them to walk the remaining 30 percent together.”

Negotiations between Greece and creditor institutions have failed to move forward, with the main sticking points being over labor-market and pension reforms and state asset sales.

“The government will gradually increase lower wages; that is our mandate,” the premier said. “We will do it in communication with our creditors.”

[Bloomberg]