Greek leader faces revolt by party hardliners as debt showdown looms

http://www.theguardian.com/world/2015/may/10/greece-alexis-tsipras-syriza-revolt-debt-showdown

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The epic struggle to keep Greece solvent and in the eurozone intensified on Saturday night amid signs of a looming crisis within the anti-austerity government that took Europe ablaze barely three months ago.

As prime minister Alexis Tsipras scrambles to secure a financial lifeline to keep the debt-stricken country afloat, hardliners in his radical left Syriza party have also ratcheted up the pressure. In a make-or-break week of debt repayments, the politician once seen as the harbinger of Europe’s anti-establishment movement has found himself where no other leader would want to be: caught between exasperated creditors abroad and enraged diehards at home.

With government coffers almost at nil and Athens facing a monumental €770m (£560m) loan instalment to the International Monetary Fund on Tuesday, it is the last act in a crisis with potentially cataclysmic effect. Either Tsipras betrays his own ideology to deter default – reneging on promises that got him into power – or he goes down as the man who allowed his country to do what no other EU member has done: enter the uncharted waters of euro exit. It is a moment of truth with consequences far beyond the borders of Greece.

“No doubt he is having nightmares about betraying ideas that he has held dear all his life,” said Aristides Hatzis, associate professor of law and economy at Athens University. “To make such a U-turn he is going to have to cross red lines that require a leap of faith I am not sure he has.”

The protracted standoff between Athens and the European Union and IMF – the bodies that have bailed out the country to the tune of €240bn since 2010 – has brought Tsipras to this point. To the dismay of inexperienced politicians in his left-dominated coalition, creditors have dug in their heels with cash reserves drying up inexorably as negotiations over a deal to unlock further bailout funds have gone to the wire.

As both sides have argued over punishing reforms – the condition of further financial assistance – the Greek economy has nosedived, reversing much of the progress it made last year when it showed the first signs of emerging out of recession. Efforts to persuade the European Central Bank to tear up its own rulebook and loosen the noose – by easing limits on cash flows to Greek banks – have fallen on stony ground. So, too, have attempts to rally support abroad.

“From the outset they have come up against a concrete wall,” said Hatzis, adding that the anti-austerity movement believed it would have much wider backing in its quest to dismantle Germany’s obsession with policies of economic rectitude. “Instead they have managed to alienate even natural allies by adopting a hostile negotiating strategy and holier-than-thou approach. In three months they have understood there is very little they can change.”

Although Syriza’s popularity has dropped precipitously, it still enjoys unparalleled levels of support. Tsipras’s approval ratings are at an all-time high, although no measures have yet been taken that affect Greeks directly. Syriza branches across the capital still display posters that proclaim “hope is coming” – the party’s pre-election slogan.

But with the contours of a solution taking shape – and indicating that belt-tightening may in fact be worse than ever before – patience is also in short supply. The prospect of the government being forced to make unpalatable concessions, overhauling the pension system and eroding workers’ rights, in addition to further taxes on property and goods, has been greeted with despondency and despair. “If Tsipras backs down, he will have a problem,” the health minister, Panagiotis Kouroumblis, said in an interview. “I have been struck by the fact that everywhere I go people approach me and say, ‘stick to your guns, don’t give in’. And that is what we have to do.”

Last week Costas Lapavitsas, the London University economics professor who belongs to Syriza’s far-left faction, insisted that “rupture” would be better than signing an agreement that departed so drastically from the leftists’ philosophy. “I can’t see how we can agree with [lenders] in a way that is in accordance with our programme,” he told Skai TV. “The issue of rupture should not be taken off the table,” he said, adding that it could take the form of refusing to pay a loan instalment.

At 28 Veikou Street, the office Syriza runs almost within view of the Acropolis, supporters are not shy of expressing disappointment. Five years into their worst crisis in modern times, Greece, they say, is in a vicious circle of austerity and decline. Last week’s news that the Greek economy would post almost no growth this year – while seeing its debt levels soar even further – at a time when the country was labouring under record levels of unemployment and poverty, offered indisputable proof that the medicine was simply wrong.

“The government already has made a lot of concessions,” lamented Zisis Novis, as he sat at a large square table debating the crisis under a poster of the Marxist revolutionary Che Guevara. “If it agrees to yet more tax increases and budget cuts, and God knows what, the economic death spiral will worsen, living standards will fall further, suicides will go up, the population will decline. It’s madness and in that case breaking with Europe is better.” Cheering him on, Triantafyllos Vlachos, a bank employee sitting next to him, snapped: “You are quite right! What does Germany [Europe’s paymaster] actually want? For all of Greece to become a land of slaves?”

Tsipras has said he will call a referendum – and put the onus on the Greek people – if his coalition is forced to sign a deal that runs counter to his mandate. Upping the ante, the energy minister Panagiotis Lafazanis, who heads Syriza’s militant wing, sent tremors through the party last week, saying it should step down rather than impose policies it had not been elected to enforce.

With no sign of an imminent breakthrough, Hatzis thinks the young prime minister will almost certainly call a plebiscite in the coming weeks. “Tsipras is a pragmatist and he has the political capital to make bold moves now,” he said. “He knows he has to move to the centre left if he is to consolidate his hegemony in Greek political life. A referendum that would give him the consent of the Greek people would be the best way to legitimise the U-turn he now has to make to keep Greece in the eurozone.”