Syriza Split Mixed Signals from a Divided Athens

Threats from senior ministers to renege on loan payments have been quickly rejected by the government spokesman, pointing to deep divisions in Greece’s ruling Syriza party.
Yanis Varoufakis (l) and Alexis Tsipras (r).

The Greek debt drama continues, with contradictory statements coming out of Athens as to whether the country can keep up its loan repayments.

On Monday, the government spokesman sought to counter a statement by the interior minister, Nikos Voutsis, who said on Sunday that the country “can’t and won’t” make the next payment to the International Monetary Fund in June.

However, spokesman Gabriel Sakellaridis insisted that Athens intends to make its payments. “Based on the liquidity problems that we have, there is an imperative need for us and the euro zone to reach a deal as soon as possible,” Mr. Sakellaridis said.

“We want to be consistent with our obligations and so we are striving for a deal so the economy can get some relief,” he said.

Yet, shortly before Mr. Sakelladris spoke, the country's deputy foreign minister, Nikos Chountis, told Greek TV: “We haven’t got the money. We won’t pay. It’s that simple.”

The next €300 million payment is due on June 5, the first installment of the €1.6 billion Greece owes the IMF in June alone.

The country desperately needs a deal with its creditors, the IMF, the European Central Bank and the European Union. They have contributed to the two bailouts, amounting to €240 billion, that Greece has required since 2010 to keep afloat.

The election of the far-left Syriza party in January, which came to power promising to end austerity, has prompted the trio of lenders to refuse to disburse the remaining €7.2 billion in the fund.

Klaus Regling, the head of the European Stability Mechanism, the bailout fund set up to aid the struggling euro-zone countries, said on Tuesday that time was running out for Greece.

"There is little time left," Mr. Regling told Bild, Germany’s best-selling newspaper. "Without an agreement with the creditors, Greece will not get any new loans. Then there's a threat of insolvency. There are a lot of risks contained in that."

Reaching a deal with creditors is being made more difficult by senior members of the Greek government who oppose giving up the “red lines” that Athens has tried to stick to in the talks, such as refusing to cut pensions and public sector wages.

Furthermore, the contradictory statements emanating from the Greek government point to deep divisions within the ruling Syriza party, with hardliners pushing to end payments to creditors.

Without an agreement with the creditors, Greece will not get any new loans. Then there's a threat of insolvency. There are a lot of risks contained in that. Klaus Regling, Head of the European Stability Mechanism

It puts pressure on Prime Minister Alexis Tsipras to reach a deal, but not at any cost. While the creditors are frustrated with Greece’s refusal to budge on issues like pension and labor reforms, Mr. Tsipras knows that many in his party will not back too many concessions.

On Sunday, Syriza’s central committee voted down a proposal by the party’s radical Left Platform to halt payments to creditors. Yet the vote was close, with 75 for and 95 against the proposal, showing that the leftist wing of the party is gaining in strength.

Furthermore, the party voted in favor of a proposal that the government would not accept cuts to wages and pensions, in its negotiations with the creditors.

Despite the difficult economic situation, the government still has the backing of the Greek people. According to the latest poll carried out by the Public Issue Institute for Avgi, a newspaper that supports Syriza, 48.5 percent would vote for the party, compared with 36 percent at the elections in January.

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On Sunday, Greek finance minister, Yanis Varoufakis, had told British broadcaster, the BBC, that progress was being made in the talks. "Greece has made enormous strides at reaching a deal," he said. "It is now up to institutions to do their bit. We have met them three quarters of the way, they need to meet us one quarter of the way."

However, this optimism does not appear to be shared by the creditors. A European official with knowledge of the negotiations, told Greek newspaper Kathimerini that momentum is lacking. “For us to move forward there has to be a political decision,” he said.

Meanwhile, Mr. Varoufakis has admitted that he had recorded a meeting of euro zone finance ministers at the end of April in Riga.

“In the absence of minutes, I often record my interventions and responses on my mobile phone, especially when I adlib them,” he wrote on his blog. “The purpose is, naturally, to be able to recount my exact phrases and, accordingly, to brief my prime minister, the cabinet, parliament etc. on precisely what I said. I did the same in the Riga Eurogroup meeting and, afterwards, back in Athens, used that recording to work on my brief to my colleagues.”

There was widespread disbelief in Brussels that the Greek minister had recorded the meeting. The meeting of the Eurogroup was confidential, noted a spokesperson for the European Union Commission. “We rely on every person present to respect this confidentiality,” she added. The president of the Eurogroup, Jeroen Dijsselbloem, also made a statement along these lines. Although there is no official rule against it, the consensus in the Eurogroup is that recordings are prohibited.

One thing is certain: the climate between Athens and its negotiating partners hasn’t been improved by the revelations. “How can you still exchange a word in confidence with him?” one euro zone representative said to Handelsblatt.

At the same time, Mr. Varoufakis has been sidelined in the negotiations with the creditors, with Deputy Foreign Minister Euclid Tsakalotos appointed coordinator of the negotiating team and Mr. Tsipras having the ultimate say on any deal.

The talks with Greece will continue on Tuesday, with the focus on value-added-tax hikes, the primary surplus, and pension and labor reforms.

“We are continuing to work intensively to reach an agreement on a comprehensive, robust and credible reform package, ” said Valdis Dombrovskis, the vice president of the European Commission responsible for the euro zone, adding that no attempt was being made to extend the current bailout package beyond the end of June.

“The negotiations have to be significantly speeded up so that we can successfully conclude the current program and unlock the next payment for the country,” Mr. Dombrovskis told Handelsblatt.

According to sources in Brussels, there has been no talk so far in the negotiations with Greece of extending the current program, which runs out in June. By that time, Greece must “substantially comply with all the conditions,” a high-ranking euro zone official said.

The European Commission would not confirm or deny the possibility of an extension. “We want to conclude the current program as quickly as possible,” a spokesperson said.


Gerd Höhler is Handelsblatt’s Athens correspondent. Ruth Berschens, Handelsblatt’s bureau chief in Brussels, Jan Hildebrand, deputy bureau chief in Berlin, and Siobhán Dowling, an editor with Handelsblatt Global Edition, contributed to this piece. To contact the author:  [email protected].