Delays as well as disagreements between the International Monetary Fund and Germany over the Greek bailout program are threatening to unravel Prime Minister Alexis Tsipras’s strategic narrative, stipulating the conclusion of the second review of the country’s third bailout, which would trigger debt restructuring talks and Greece’s inclusion in the European Central Bank’s quantitative easing program.
With his government lagging behind opposition New Democracy in the polls, Tsipras appears to be in a race against time as he is well aware that the gap could widen if he does not come up with tangible results in the next few months, given an increasingly disillusioned electorate and the fact that highly unpopular tax hikes will kick in after the fall.
But these tangible results could be a long time coming as government aides are concerned that Berlin, and especially German Finance Minister Wolfgang Schaeuble, will act to delay the conclusion of the second review in order to defer talks about Greek debt relief.
According to reports, German intentions were evident at last week’s Eurogroup, which approved 1.1 billion in bailout money instead of the 2.8 billion the leftist-led coalition had been banking on. Government officials said this happened despite reassurances from Eurogroup chief Jeroen Dijsselbloem, Finance Commissioner Pierre Moscovici and Euro Working Group head Thomas Wieser, that Athens would receive the full amount.
Schaeuble was, reportedly, the main obstacle, insisting that Greece had not presented all the data concerning state arrears to third parties which was required before eurozone finance ministers would approve the release of the full tranche amount.
Moreover, sources added that given the time it will take before Berlin and the IMF reach consensus over how the latter will participate in the Greek program, the climate of uncertainty regarding the country’s economy will only be prolonged, essentially undermining Tsipras’s key objective of attracting foreign investors to kick-start growth.
Tsipras’s concerns will be raised during his meeting with German Chancellor Angela Merkel and French President Francois Hollande at the EU Summit on October 20 and 21. He is also expected to contact IMF chief Christine Lagarde.