Cornered government could seek early elections

Cornered government could seek early elections

The government’s fear that a compromise between the European Union and the International Monetary Fund to secure the latter’s participation in the Greek bailout program will lead to a new batch of measures in 2018 through 2020 has prompted Prime Minister Alexis Tsipras to revive the prospect of snap polls.

Tsipras was apparently hoping that the IMF would sit out the negotiations of the second review of the country’s third bailout, thus allowing the government to secure its key aim of debt relief without having to achieve primary surpluses of the order of 3.5 percent after 2018.

However, the signals coming from Berlin indicate that a different course is being mapped out as German Finance Minister Wolfgang Schaeuble is insisting that the second review must be concluded in tandem with an agreement over the continued participation of the IMF in the Greek bailout program. And given that any debt relief will not be overly generous to start with, the IMF is expected to demand the implementation over the next few years of further austerity measures that will be enshrined in a new deal with Athens early next year.

The extra measures, government sources suggest, will include the lowering of the tax-free threshold to 5,000 euros, the scrapping of a string of tax exemptions and further burdens on pensioners.

The government’s concerns were highlighted in a speech by Tsipras last Wednesday to the SYRIZA parliamentary group, where he insisted that he will not accept further measures, “especially if they concern the years after the program has ended” – meaning, in other words, the years beyond 2018. He further added that elections could be in the pipeline if the bailout review negotiations collapse.

However, aides to the PM were quick to note that he wanted to send a message to the country’s creditors, none of which wants to see Greece make too many waves in 2017, a year of important general elections across Europe.

Tsipras is also feeling the pressure from within his own party as dissenters have made it abundantly clear that they will not acquiesce to further measures, which would be owned exclusively by the incumbent government as the bailout agreement in 2015 was sold and viewed as the result of the policies followed in preceding years by New Democracy and PASOK.

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