From Troika hater to Troika defender. How Alexis Tsipras became the EU’s number one fan

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Post originally appeared on Bloomberg.

The troika has a new enforcer: Alexis Tsipras.

His finance minister, Euclid Tsakalotos, will welcome representatives from the European Union, International Monetary Fund and European Central Bank at 10 a.m. Friday while the premier focuses his attention on stamping out an internal rebellion. It’s the first time since SYRIZA swept to power in January that the loathed trio get access to a cabinet member.

After railing against austerity, the Greek leader has come to accept it as a necessary evil to keep Greece in the euro. The U-turn leaves Tsipras on the same path trodden by predecessors including arch-enemy Antonis Samaras, who at one time he had blasted for kowtowing to creditors’ demands.

“Whoever thinks another government and another prime minister would do better, they should speak up,” Tsipras, 41, told his party members in Athens Thursday. “If someone thinks that this agreement is the worst compared to the previous bailouts, they should speak up and explain why.”

After winning massive public support for rejecting more belt-tightening, Tsipras folded in the aftermath of bank closures and capital controls. He signed up for more cuts as the only way to get an 86 billion euros ($94 billion) rescue loan.

The reversal left him at odds with own rank and file in a showdown that could put Europe’s most indebted state on course for snap elections.

SYRIZA mutiny

Speaking to the central committee of the SYRIZA governing party, Tsipras challenged critics to hold a party ballot on Sunday if they reject his decisions. In a show of hands, the committee backed his call for an emergency congress in September. The meeting was called after about a quarter of the party’s lawmakers rejected Tsipras’s move to seek a new bailout.

Opposition to the bailout is strongest in the Left Platform of Syriza, led by former energy minister Panagiotis Lafazanis. It accuses Tsipras of violating the mandate voters gave him in January and in a July 5 referendum that saw Greeks oppose more spending cuts. Lafazanis was replaced as energy minister after leading a revolt against the new agreement.

The uprising has forced Tsipras to rely on opposition support to pass policies demanded by creditors.

“After abandoning earlier vows of unity, both sides appear to be preparing for a showdown today that could even split the party,” Paris Mantzavras and George Grigoriou, analysts at Athens-based Pantelakis Securities SA, wrote in a note to clients Thursday.

Party split

Eurasia Group analyst Mujtaba Rahman said a “formal split within SYRIZA is only a matter of time.”

Left Platform dissenters, publishing their views on Iskra, a website named after a newspaper managed by Russian revolution leader Vladimir Ilyich Lenin, have called on Tsipras to annul a July 12 agreement with creditors, and lead the country out of the euro area. Other prominent SYRIZA lawmakers, including Parliament Speaker Zoi Constantopoulou, have joined them in voting against the deal.

Constantopoulou said earlier this month that the measures Germany and other creditors are asking Greece to implement constitute “a crime against humanity” and “social genocide.”

Tsipras fought back on Wednesday, telling Sto Kokkino radio that the alternative to July’s agreement would be the collapse of Greece’s financial system.

“If I did what my heart was telling me to do, get up and leave, the very same day the branches of Greek banks abroad would fall,” Tsipras said. “Within 48 hours,” Tsipras added, the ECB would pull the plug of emergency loans from Greek lenders, “which would mean, at first, the collapse of Eurobank, then possibly the National Bank of Greece, and, maybe, along the way — the rest of the banks.”

The IMF on Thursday reiterated its support for one of Tsipras’s central arguments, that Greece needs debt relief in order to stabilize its public finances. Standing in the way is Germany, the country that has loaned Greece the most. IMF executives won’t support disbursing more aid to Greece without an explicit, concrete commitment from the euro area to ease the country’s debt burden, a fund official told reporters.



The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

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