Greece: Tsipras makes U-turn over austerity support

Greek Prime Minister Alexis Tsipras arrives to address his parliamentary group. Picture: AFP/Getty
Greek Prime Minister Alexis Tsipras arrives to address his parliamentary group. Picture: AFP/Getty
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GREEK MPs are to debate new proposals sent to the country’s creditors this weekend, with the aim of getting a third bailout and averting a possible exit from the euro.

The plans contain elements, including pension reforms and tax rises, that were rejected in a referendum called by prime minister Alexis Tsipras.

It is better to be dead than be slaves in this life

Aristidis Dimoupulos, academic

Mr Tsipras sought his left-wing party’s backing yesterday for a new budget austerity package that is harsher than that which he urged Greeks to reject in a vote just last week, but would provide the country will longer-term financial support.

Government ministers signed off on the sweeping new measures, which include pension cuts and tax increases that are likely to inflict further pain on a people that have just emerged from a six-year depression.

If approved, Greece would in return get a three-year package of loans worth nearly $60 billion as well as some form of debt relief. The package would be far larger than the 7.2 billion euros creditors had been offering to Greece during the previous five months of fruitless negotiations.

Greece’s latest proposal was sent to rescue creditors who will meet this weekend to decide whether to approve them. The new package of loans would be Greece’s third bailout since it lost access to financing from bond markets in 2010.

Mr Tsipras convened his party’s politicians for closed-door discussions yesterday morning before the parliamentary debate. The proposal was being debated at committee level yesterday .

The coalition government has 162 seats in the 300-member parliament and forecast backing for a deal from a large section of opposition politicians. But failure to deliver votes from his own government could topple Mr Tsipras’ coalition.

The proposals are to be discussed by eurozone finance ministers today, ahead of a summit of the European Union’s 28 leaders tomorrow.

Though German officials would not be drawn on the merits of the Greek proposals, French president Francois Hollande said they are “serious and credible.” France’s socialist government has been among Greece’s few allies in the eurozone during the past months of tough negotiations.

Jeroen Dijsselbloem, who chairs eurozone finance ministers’ meetings, said the proposals were “extensive” but would not say whether he considered them sufficient. Yesterday, Mr Dijsselbloem was due to hold a conference call with the leaders of other key creditors, the EU’s executive commission, the European Central Bank and the International Monetary Fund.

They were then expected to send their assessment of the proposal to the eurozone finance ministers.

As Athens inched closer to a deal to ensure Greece does not crash out of Europe’s joint currency, some Greeks were furious at the deep spending cuts in the proposals.

“If this is Europe, then we don’t want this Europe,” said Aristidis Dimoupulos, a marketing professor in Athens.

“If this is the eurozone, we don’t care if we go out or in. If in this life we’ll be slaves, it’s better to be dead.”

Others adopted a “wait and see” approach. “I don’t know. The chances are fifty-fifty for a deal,” said Athens resident Omiros Fotiadis.

Meanwhile, in Greece, banks remained shut and cash withdrawals were restricted to 60 euros per day. Although credit and debit cards work freely within the country, many businesses are refusing to accept them and insisting on cash-only payments. All money transfers abroad, including bill payments, require special permission.

Minister Dimitris Mardas said banks would be gradually restored to operation. They are due to stay closed until Monday, at which time he said a new order would be issued expanding what transactions can be carried out.

Experts say it is unlikely that, even in the event of a deal, limits on cash withdrawals and transfers will be lifted completely.

Rallies backing and opposing the government were planned in Athens for yesterday evening.

Mr Tsipras’ Syriza party had previously resisted a new loans-for-austerity deal, arguing the country was too weak to endure it, with a quarter of the labour force out of work and a growing number living in poverty.

But it was forced to resume talks with creditors as the Greek banks faced the prospect of collapse within days.