Greek Deal at Risk From Political Rebellion

As Greek Prime Minister Alexis Tsipras embarks on a last-ditch effort to agree on a reform deal with creditors, a rebellion is mounting at home among his own Syriza party and the opposition.

Tsipras is in Brussels on Thursday to continue emergency talks with Greece’s lenders after they rejected new reform proposals from his country earlier this week. Greece desperately needs further financial aid to avoid defaulting on its debt at the end of the month, but its creditors want an agreement on reforms before they release any more funds.

Institutions representing Greece’s creditors — the International Monetary Fund, the other euro zone countries and the European Central Banks — on Thursday gave Athens a deadline of 10:00 U.K. to produce a fresh set of proposals or they would present their own set of reform plans, according to Reuters.

Also Thursday the ECB approved the Greek central bank’s request for further emergency liquidity assistance funding for the country’s banks, a banking source told Reuters.

Even if a deal is made, however, the prime minister faces a challenge getting it through the Greek parliament.

There’s rebellion rumbling among the hardliners within his own Syriza party, who are expected to reject any measures which add to the burden on pensioners. The party’s coalition partner, the right-wing Independent Greeks party, has also vowed to oppose any rise in the lower VAT (sales tax) on Greek islands – something proposed by Syriza in a bid to appease creditors.

Speaking to CNBC in Athens Thursday, Greek Minister for Administrative Reform, Giorgos Katrougalos, said that either there was going to be a “fair and equitable agreement, or none at all.”

“And if we have a fair agreement, a fair compromise, everybody’s going to back it up,” he said, although he warned that there was a limit to how much Greece would concede to lenders.

“We want to pay back the money (that Greece has borrowed), but not a pound of flesh on top of that,” he added. “We don’t want the burden again to be on the weakest and the poorest and we have proposed equivalent measures to what the lenders demand.”


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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