Greece's Tsipras: party rebels could force early election

AP News
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Posted: Jul 29, 2015 10:17 AM
Greece's Tsipras: party rebels could force early election

ATHENS, Greece (AP) — Greece's prime minister sought to contain a deepening rift in his radical left Syriza party Wednesday, warning rebels that he would have to call early elections if they keep opposing key reforms demanded for a new international bailout.

Alexis Tsipras insisted that he has no wish to go to the polls, which would put the country through more political uncertainty, potentially hurting the economy at a crucial point in its struggle to stabilize.

But he added: "If I don't have the parliamentary majority I will be forced to go to elections."

In an interview with Syriza's Sto Kokkino radio station, Tsipras said that he wants to hold a party congress in September, once the vital bailout deal is sealed, to decide on the party's future. Tsipras and his Syriza party came to power only in January with a four-year mandate.

Representatives of Greece's creditors — its European Union partners and the International Monetary Fund — are currently meeting officials in Athens to discuss the terms of the new bailout, designed to provide 85 billion euros over three years.

"We are satisfied with the smooth and constructive cooperation with the Greek authorities, and that should now allow us to progress as swiftly as possible," Mina Andreeva, a European Commission spokeswoman, said in Brussels.

The main issues under negotiation are pension and labor reforms. Greece is hoping to have a deal ready for parliamentary approval on Aug. 18, two days before it has to repay more than 3 billion euros, which it currently lacks, to the European Central Bank. Failure to pay the ECB would prompt bankruptcy and new fears of a forced euro currency exit.

Tsipras was elected on a staunchly anti-austerity platform that resonated with Greeks hard-hit by five years of tough income cuts and tax hikes demanded by international creditors in return for the rescue loans that kept the country afloat.

But his attempts to negotiate a better deal fell flat, and Greece was forced on July 13 to accept further harsh cutbacks, including hikes in the sales tax on key consumer goods. Anti-austerity hardliners in Syriza did not back two initial packages of reforms this month that were demanded by creditors to start talks on the new lifeline — Greece's third since 2010.

The reforms were approved in parliament with the support of pro-European opposition parties, but the revolt called the government's survival into question.

Tsipras has taken no action so far against rebel lawmakers, although he criticized their stance Wednesday and said they should step down if they disagree.

"It is too surreal to say that 'I vote against the government's proposals but support the government'" he said. "(Or) 'I am denouncing you to protect you.' I'm not a little child."

Teneo Intelligence analyst Wolfgango Piccoli said Syriza looks set to split into at least two groups — the leftwing hardliners and a moderate group led by Tsipras.

"Despite his popularity, Tsipras is facing an uphill struggle to keep his party united and under his control," he said in a note. "As a result, the risk of unforeseen intra-Syriza developments that could delay, and at worst derail, the ongoing talks between Athens and its international creditors cannot be discarded."

In the stormy days leading up to the July 13 agreement, Tsipras called a referendum on whether to accept creditors' demands for further austerity — which Greeks voted against — and was forced to impose strict controls on bank withdrawals to stop panicking depositors from emptying their accounts.

In Wednesday's interview, Tsipras accused other European countries of "taking revenge" on Greece for the referendum by forcing capital controls on the country.

While banks have reopened for limited business after a three-week closure, Greeks are still limited to a 60 euro ($66) daily withdrawal ceiling and are blocked from most online purchases abroad.

The Greek parliament's budget office said Wednesday that the controls are unlikely to be lifted soon, hampering the economy's return to "normality." It said the restrictions are costing the shrinking economy an estimated 1.75-2.8 billion euros weekly, while long delays in negotiations with creditors significantly worsened the economy's outlook for the next five years.

Greece's economy is forecast to contract between 2 percent and 4 percent this year, despite initial forecasts for modest growth, because of deep uncertainty in the run-up to this month's deal in Brussels. Since 2008, the economy has shrunk more than a quarter — with unemployment hitting record peacetime highs of more than 25 percent.