Syriza alternates between a rhetoric that plays to the Greek populace and talk meant to soothe creditors and investor fears. Here is a sample of the narrative Prime Minister Tsipras presents to the Greek people: In a speech Sunday before parliament, Greek Prime Minister Alexis Tsipras made it clear that, despite warnings from leaders across Europe, he won’t back down from reversing the austerity measures, steep tax increases, and harsh spending cuts that were demanded of his country in exchange for billions in bailouts to stave off economic collapse.
At the same time, finance minister Varoufakis has insisted that Greece will meet all its debt obligations to EU creditors. He has suggested doing so through a debt swap in which existing loans would be swapped for loans whose payments would be tied to Greek economic growth. This represents a huge shift away from Syriza’s earlier position that a considerable part of Greek debt should be written off. This concession is intended to calm investor fears that creditors are going to take a huge haircut in any deal that Syriza will accept.
In another such move, Finance Minister Yanis Varoufakis is set to announce to his EU counterparts on Wednesday that the privatization of the port of Pireaus would go ahead as originally planned rather than stopped. This sets a precedent for sanctioning privatization of public assets as demanded by the Troika bailout conditions. No doubt, Varoufakis hopes that this move will help him get bridge financing to allow Greece some breathing space to negotiate a new deal. The existing bailout deal ends on February 28th.
The European Central Bank(ECB) has already said that Greek sovereign securities will no longer be eligible for use as collateral. While Greece can still finance itself through Emergency Liquidity Assistance(ELA), it will cost more and even that assistance must be authorized by ECB authorities. The ECB is turning the screws on Greece making it even more urgent that the Greek government reach a bridge financing deal. Today, Greece is expected to propose a 10-step reform process to replace present bailout provisions with the agreement of the Organization of Economic Cooperation and Development(OECD).
Many economists agree with Syriza that the bailout agreement conditions are unjust: More than 300 economists and academics from around the world have signed a petition that demands “debt justice” for Greece. They argue that austerity has plunged the country into a depression that will likely cause public debt to further increase.
Yet, German Finance Minister Wolfgang Schaeuble said yesterday that there were no plans either to discuss a new accord or even give Greece more time: He said in Istanbul yesterday after a meeting of finance chiefs from the Group of 20 that if Greece doesn’t want the final tranche of its current aid program, “it’s over.” Creditors “can’t negotiate about something new.”
The Greek government might decide to seek help elsewhere. Both Russia and China have offered Greece financial aid even though Greece did not ask for it. For its part, the Greek government has said it may “tilt toward” Russia and China, if the EU negotiators are too rigid. The Greek Defense Minister, Pannos Kammenos, leader of the Independent Greeks party in the coalition government said Greek had as plan B seeking funding from another source if an EU deal could not be reached. You would think that plan B would also include a plan for a Grexit or exit from the euro zone. A recent poll by the University of Thrace shows that 70 percent of Greeks support the negotiating tactics of the government.
