ATHENS—Greek Prime Minister Alexis Tsipras began leaning toward a risky referendum after creditors covered his proposed policies in red ink, according to people close to him.
It was on Tuesday that the International Monetary Fund, European Central Bank and European Commission—the enforcers of Greece's bailout program—tore apart a set of economic policies that Mr. Tsipras had hoped would unlock urgent funding for his country. They marked up Greece's policy document with deletions and amendments in red font, much like a teacher's notes to a failing student.
The policies that the so-called troika of institutions wanted instead—including tough pension cuts—looked impossible for Mr. Tsipras to sell to his left-wing Syriza party back home. Greek officials say that when Mr. Tsipras also failed to get German Chancellor Angela Merkel and other European leaders to cut him some slack, he opted on Friday to let the voters decide.
Greece's July 5 referendum on the troika's last known set of economic demands for bailout aid has stunned Greeks, baffled Europe and threatens to put the country on a path to exit from the euro. The vote's outcome also risks cutting short the 40-year-old Mr. Tsipras's turbulent, five-month career as Greek leader.
"Tsipras took a decision of high political risk for the country, for Syriza—and for himself," said John Dimakis, a political analyst at consultancy STR in Athens.
Mr. Tsipras and his government are calling on Greeks to vote "no" to the troika's demands, to send a signal to Europe and the IMF that Greece wants a better deal for continued rescue loans. The premier told Greece's Parliament in the early hours of Sunday that Greeks could vote "no" and still keep the euro, while boosting the government's bargaining position.
But that hope, officials from the creditors' side say, misreads the collapse of goodwill toward Greece across Europe. In Germany and many other nations that are financing Greece's €245-billion ($ 270-billion) bailout program, concessions to Greece are increasingly unpalatable to exasperated governments and skeptical electorates.
A "no" vote in next Sunday's referendum would be treated by much of Europe as the end of the five-year effort to save Greece from bankruptcy and euro exit. Even a "yes" result wouldn't necessarily save the Greek bailout, because officials in Germany and elsewhere don't trust the Tsipras government to implement a set of austerity measures and economic overhauls that Syriza is campaigning against.
"If Greeks vote for 'yes,' then the government will most likely have to resign, and the country will be either have elections or a coalition government," said Ilias Nikolakopoulos, a political-science professor at Athens University. "If the outcome is a 'no,' it is very hard to predict what is going to happen" to Greece or Mr. Tsipras, he said.
Some analysts believe Mr. Tsipras is more likely to survive as premier if the people side with him on Sunday and vote against the creditors. But if that outcome brings Greece's bailout to an end, forcing it into insolvency and eventual euro exit, Mr. Tsipras could also face the ire of a nation that overwhelmingly wants to stay part of Europe's common currency.
Since winning power in Greece's January elections, Mr. Tsipras has struggled to reconcile his two main promises: To end creditors' austerity regime, and to keep the euro. Over the last five months, analysts and government insiders say, the inexperienced premier has oscillated between rival groups of ministers and aides.
Some, such as Deputy Prime Minister Yannis Dragasakis, advocated conciliation with Europe and the IMF; others, such as Finance Minister Yanis Varoufakis, championed confrontation, convinced that playing chicken until the very end would scare Europe into blinking, easing Greece's bailout terms and its debt burden.
Last weekend, Mr. Tsipras backed the mild-mannered Mr. Dragasakis and others who drew up Greece's policy proposals, which sought to hit tough budget targets mainly via tax increases on business and middle-class employees. But the troika, led by the IMF, rejected that strategy, insisting on greater use of spending cuts, including to pensions, and stiffer increases in value-added taxes. Those measures were better for Greece's long-term growth, the IMF argued. But they would also have hit core groups of Syriza voters, including pensioners and low-income households.
The Greek leader swung increasingly back to Mr. Varoufakis's view that, if the creditors reject Greece's proposals, Athens should reject the creditors, people familiar with the matter say.
The troika noticed the change last Wednesday when Greek negotiators took back some of their previous concessions, including on value-added taxes, pensions and labor rules, officials involved in the talks say. Greece's negotiators were still in talks with the troika on Friday night, trying to bridge differences on VAT and pensions, when they learned that Mr. Tsipras had decided on a referendum, people involved in the talks say. The surprised Greek team pulled out of the talks.
At an EU leaders' summit on Thursday and Friday, Ms. Merkel's refusal to engage in negotiations with Mr. Tsipras about the policy package was the final proof that his strategy had failed. For months, he had counted on talking to Ms. Merkel—Europe's most powerful politician—at the 11th hour, pressing her to save Greece and preserve Europe's unity with magnanimous concessions.
But Ms. Merkel's room for maneuver had disappeared. German public and elite opinion has turned increasingly hostile toward the Greek government. In recent months some opinion polls found, for the first time, that most Germans supported a Greek exit from the euro. Ms. Merkel, a risk-averse politician always carefully attuned to domestic sentiment, has wanted to keep Greece in the euro, officials say—but she needed Mr. Tsipras to satisfy the troika, including the hard-line IMF.
He couldn't.
That night Mr. Tsipras told Ms. Merkel and French President François Hollande in a phone call that he was calling a referendum, surprising them both. But what angered Berlin and other creditors even more was when Syriza ministers made it clear afterward that the government would campaign for a "no" vote.
Had Mr. Tsipras chosen to campaign for a "yes," then Europe might well have granted Greece a short extension of the bailout program, senior officials in Berlin say. But it was impossible for Ms. Merkel to ask Germany's parliament to prolong the bailout to help Mr. Tsipras's effort to defeat it, the officials say. Greeks' hopes of keeping the euro now hinge on Europe finding a new goodwill toward, and trust in, Greece's government. That may be difficult with Mr. Tsipras in charge, policy makers in Germany and elsewhere say.
No comments:
Post a Comment