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| Greek crisis: how long can Alexis Tsipras outmanoeuvre the troika? | Greek crisis: how long can Alexis Tsipras outmanoeuvre the troika? |
| (about 1 hour later) | |
| It must have seemed so simple for Jean-Claude Juncker earlier in the week when the president of the European Commission got together with Mario Draghi of the European Central Bank and Christine Lagarde of the International Monetary Fund. | It must have seemed so simple for Jean-Claude Juncker earlier in the week when the president of the European Commission got together with Mario Draghi of the European Central Bank and Christine Lagarde of the International Monetary Fund. |
| The so-called troika decided that it was time Greece was brought to its senses. The posturing, the rhetorical flourishes, the shows of defiance had gone on for long enough. A tough set of proposals was drawn up, including demands for VAT, pension and wage bargaining reform that the troika knew Greece would find unpalatable. | The so-called troika decided that it was time Greece was brought to its senses. The posturing, the rhetorical flourishes, the shows of defiance had gone on for long enough. A tough set of proposals was drawn up, including demands for VAT, pension and wage bargaining reform that the troika knew Greece would find unpalatable. |
| But so what? Greece was running out of cash. It had only been able to make its last repayment to the IMF with money held by the IMF itself. The next deadline was looming, the Greek economy has slid back into recession, the country badly needs access to the €7bn being held back by the troika until a reform package is agreed. Time to get tough. Time to say to Greece “take it or leave it”. | But so what? Greece was running out of cash. It had only been able to make its last repayment to the IMF with money held by the IMF itself. The next deadline was looming, the Greek economy has slid back into recession, the country badly needs access to the €7bn being held back by the troika until a reform package is agreed. Time to get tough. Time to say to Greece “take it or leave it”. |
| Not for the first time, the troika has underestimated Alexis Tsipras, the Greek prime minister. Far from caving in, he has raised the stakes. Instead of tugging his forelock in gratitude he has stuck two fingers up at the great and good in Brussels, Frankfurt and Washington. | Not for the first time, the troika has underestimated Alexis Tsipras, the Greek prime minister. Far from caving in, he has raised the stakes. Instead of tugging his forelock in gratitude he has stuck two fingers up at the great and good in Brussels, Frankfurt and Washington. |
| Greece has the money, Tsipras has said, but we have decided not to pay it to the IMF just yet. We have three other payments due in June, so we will bundle them all together and pay them at the end of the month. This is technically within IMF rules, but the announcement came just hours after Lagarde had said that she had been told by Tsipras that he would not delay payment. Privately, the IMF is seething at Greece’s show of defiance. | Greece has the money, Tsipras has said, but we have decided not to pay it to the IMF just yet. We have three other payments due in June, so we will bundle them all together and pay them at the end of the month. This is technically within IMF rules, but the announcement came just hours after Lagarde had said that she had been told by Tsipras that he would not delay payment. Privately, the IMF is seething at Greece’s show of defiance. |
| The troika now has to make a judgment about two things. The first is whether the Greeks are bluffing about being able to make the IMF payment. George Stathakis , the country’s economy minister, said on the BBC Today programme that Greece could have paid but chose not to. The message was that non-payment was a negotiating tactic rather than a sign that there was no money left. | |
| It is clear, though, that the financial situation faced by the Greek government is becoming increasingly desperate. Sooner or later it will be unable to pay up, and that moment is close. It may already have been reached. | It is clear, though, that the financial situation faced by the Greek government is becoming increasingly desperate. Sooner or later it will be unable to pay up, and that moment is close. It may already have been reached. |
| The other big decision for the troika is to gauge how far Tsipras is prepared to take this. Would he call a general election, which the opinion polls suggest his Syriza coalition would win? Does he intend to hold a referendum, asking the Greek people whether they would be prepared to remain part of the euro if the price is more austerity? Given the domestic pressures on Tsipras not to buckle to the troika, one of those options is now looking likely, for one simple reason: Syriza was elected to end austerity in Greece and will be finished as a political force if he caves in. | The other big decision for the troika is to gauge how far Tsipras is prepared to take this. Would he call a general election, which the opinion polls suggest his Syriza coalition would win? Does he intend to hold a referendum, asking the Greek people whether they would be prepared to remain part of the euro if the price is more austerity? Given the domestic pressures on Tsipras not to buckle to the troika, one of those options is now looking likely, for one simple reason: Syriza was elected to end austerity in Greece and will be finished as a political force if he caves in. |
| For almost six months, Tsipras has been running rings round the troika. He has important things going for him, most notably his democratic mandate and the knowledge that no European country wants to be held responsible for ejecting Greece from the euro. Athens is also right to point out that the troika’s plan will do nothing to sort out the country’s long-term debt problems. Indeed, by turning the screw tighter, it will make them worse. | |
| Even so, Tsipras has his own calculations to do. He believes he can squeeze concessions out of the troika and he is probably right. But they are unlikely be major, because Greece is skint and it wants to stay in the euro. What’s more, in many European capitals patience with Greece ran out some time ago. | Even so, Tsipras has his own calculations to do. He believes he can squeeze concessions out of the troika and he is probably right. But they are unlikely be major, because Greece is skint and it wants to stay in the euro. What’s more, in many European capitals patience with Greece ran out some time ago. |