Following his meeting with German Chancellor Merkel in Berlin on Friday, Greek Prime Minister Alexis Tsipras appears to have a dilemma to consider: he could strive for a compromise with creditors to swiftly conclude the ongoing review of the bailout program; or denounce the tough proposals put forth by creditors and go to the people, risking a heavy defeat for his government.
Analysts point out that Angela Merkel politely but carefully limited Tsipras’ options to the above two scenarios as she ruled out striking the “political deal” Tsipras would have wanted to help him avoid implementing more austerity.
It is now most likely that negotiations with the country’s creditors – the European Commission, the European Central Bank and the International Monetary Fund – will continue well into January 2017. Athens can hope for the social benefits it recently legislated will be signed off by creditors as the German Chancellor too showed understanding especially for the measures designed to help Greek islanders who have been affected by the refugee crisis.
However, the Greek government will have to negotiate tough austerity measures with the IMF – that Berlin wants to remain in the program – and the other creditor institutions, under the scrutiny of German Finance Wolfgang Schaeuble who is highly influential within the Eurogroup.
The “red line” Athens will draw will be at legislating measures destined for implementation at the end of the current program in 2018.
The Tsipras administration argues that debt relief and Greece’s incorporation in the European Central Bank’s quantitative easing mechanism will put the economy well on track to growth, meaning it will be needless and counterproductive to legislate austerity measures now for years to come.
Direct negotiations between government officials and creditors in Athens ended last Friday and talks will continue via teleconferencing, aimed to concluding the delayed second review of the Greek program./IBNA
Photo: IBNA/Spiros Sideris