Both sides said progress had been made in negotiations over the weekend. The Greek government is short of cash and had to borrow money from pension funds and local governments to scrap up enough money to pay off the IMF and salaries. On April 20, the government issued a decree forcing local authorities to place their cash reserves in the Bank of Greece. Greek officials are hoping to release the remaining $7.7 billion left in their bailout loan as soon as possible. Another payment of 750 million euros is due to the International Monetary Fund on May 12.
Deputy Prime Minister Giannis Dragasakis is to meet Tuesday with Mario Draghi, president of the European Central Bank, while Finance Minister Yanis Varoufakis will meet with Pierre Moscovici, economic affairs commissioner in Brussels. Varoufakis is less in the limelight these days as the Greek negotiating team now has some members less confrontational and more acceptable to the Eurogroup of Finance Ministers. Spokesperson for the Greek government, Gabriel Sakellaridis, said: “At this moment, the government is discussing, it is negotiating, and there has been significant progress at these negotiations. The government is awaiting and expecting the release of funds, and for this liquidity to be made available not at the end of May but as soon as possible.”
A eurozone official said that negotiations were finally “in full swing.”
No details have been forthcoming as to areas where progress has been made, but Greek officials claimed earlier that there has been progress on the issue of tax reform, reform of the bureaucracy and on the issue of privatization. Some statements from government officials have been critical of the privatization program and even suggested the privatization of the port of Piraeus would not go ahead. A source told the Telegraph that Greece had agreed to reduce three VAT rates to one, a change Prime Minister Tsipras argues would hurt poor people. Also the government had agreed to go ahead with privatizations that earlier had been rejected.
So far the government has resisted accepting demands that state support for a number of pension funds be phased out. Creditors also want a low minimum wage and cuts in various pensions So far the Greek government has seen these as “red lines” not to be crossed. Syriza gained support of Greek voters by promising to end the harsh austerity program associated with the demands of the Troika of the European Central Bank, the International Monetary Fund, and the European Commission but so far have been unable to convince the “institutions,” as the Troika are now called, to agree to any relief from these conditions. It seems clear that the Greek government is going to get very little if any relief from austerity conditions in any deal with its creditors. If the government had strong support among the Greek populace for a Grexit or exit from the eurozone, the government might be willing to take that leap. However, in spite of the failure so far of the Syriza government to negotiate alleviation of austerity conditions, Greeks still overwhelmingly want a deal and a majority want a deal even if Greece’s demands are not met: … 71.9 percent of those surveyed said a deal with creditors would be best for the country, while 23.2 percent said they prefer a clash. An Alco survey in Proto Thema newspaper showed that half of respondents want a compromise even if creditors reject Greek government demands, while 36 percent said the government should opt for a “rupture.”
An article in Jacobin by Stathis Kouvelakis, who both teaches political theory at King’s College in London and also serves on Syriza’s central committee, argues that there are only two likely outcomes of negotiations between Greece and its creditors. The third possibility is that Greece and its creditors make a deal in which creditors compromise and allow Greece to increase minimum wages, save state assets from privatization, retain pensions as they are and allow Syriza to keep at least some of its election promises. Kouvelakis argues that the continued demands by creditors show that they require that the austerity provisions of the original bailout deal be kept intact.
The second alternative, one that is more likely is that the Greek government and Tsipras will simply give in to the demands of the Troika. : But in a recent interview with Reuters, Tsipras made it clear that there are “political, not technical disagreements” on four key issues: labor legislation, pension reform, a hike in value-added taxes, and privatizations, which he referred to as “development of state property” rather than asset sales. Making concessions on that bottom line would amount to surrender and to political suicide for Syriza.
On the issue of privatization and the value-added tax (VAT), Tsipras has already caved. If he intends to have funds released soon he will need to cave also on the remaining two issues of labor legislation, and pension reform. With the public mood being in favour of remaining in the Eurozone even if Greek demands are not met, Tsipras will probably hope for a few cosmetic changes in the original bailout conditions that he can then spin as a great victory.
There are some within Syriza who feel the negotiations up to now have clearly shown that as long as Greece remains in the Eurozone, it will be subject to debt slavery and the demands of its creditors with no chance of any independent policy meant to further the policy platform of Syriza. At the very least, the Greek government should convince creditors that a Grexit is plan B for Syriza, if they fail to achieve significant reforms in negotiations. So far even Varoufakis has stressed again and again that Greece will do whatever it takes to reach a deal. This simply tells the hardliners on the other side that for a deal they do not need to yield anything.
