Greek gov’t mulls measures with eye on deal while some hold hard line

The government’s strategy in negotiations with creditors and a raft of possible measures, including tax reforms, that could form the basis of an agreement, dominated a marathon cabinet meeting on Wednesday chaired by Prime Minister Alexis Tsipras.

The meeting, which ran late into the night, was aimed at examining a wide range of changes to the tax system as well as possible privatizations ahead of technical-level talks that are due to resume in Brussels on Thursday. Officials also discussed the possible timing for drafting some of these changes into legislation in a bid to show good will and convince the European Central Bank to relax liquidity restrictions on Greece.

Comments by cabinet members earlier in the day gave a mixed picture of the government’s intentions with some insisting that it remained focused on reaching a deal while others suggested there should be no compromise with the demands of Greece’s creditors, despite the increasingly tight liquidity situation.

Speaking in Parliament, Energy Minister Panayiotis Lafazanis, who heads SYRIZA’s radical Left Platform, said, “This government will not surrender,” noting that “those who believe we will step back from our red lines are deluding themselves.” He was referring to SYRIZA’s pre-election pledges to protect pensions and the rights of workers. Another senior member of the Left Platform was widely quoted in the media as saying that Greece will be unable to reach a deal with creditors this month as the latter “keep yanking our chain” and that Greece might be forced to “go it alone.”

Interior Minister Nikos Voutsis appeared more conciliatory. “We are working toward an honorable compromise,” he told Mega TV. “Immediate recourse to a referendum or elections is not in our plans right now.”

Finance Minister Yanis Varoufakis caused a stir earlier in the day when he said he could not guarantee that the government would be in power next January. He said his comments, which were in response to a question from one of hundreds of ministry cleaning staff who were rehired by the new administration, had been blown out of proportion.

Meanwhile as SYRIZA officials continued to suggest that Bank of Greece Governor Yannis Stournaras is undermining the leftist-led government, the honorary chairman of conservative New Democracy, Constantinos Mitsotakis, indicated that the central banker was being wrongly accused. Stournaras can be accused of “not informing politicians and the Greek people about the huge burdens that taxpayers are being burdened with… and of the dire state of the Greek economy, but he cannot be accused of the opposite,” he said. Mitsotakis was apparently responding to media reports according to which a close aide of Stournaras sent an e-mail to certain journalists which painted a particularly bad picture of the economy and to broader claims by SYRIZA officials that Stournaras is undermining the government. In a related development, Bloomberg reported that the European Central Bank is increasingly concerned by a deteriorating relationship between the Greek government and the country’s central bank, citing people familiar with the matter.

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