Prospect of fresh austerity measures fuels political uncertainty

Prospect of fresh austerity measures fuels political uncertainty

Athens, April 25, 2016/ Independent Balkan News Agency

By Zacharias Petrou

As the government’s negotiations with creditors still hang in the balance, the Tsipras-administration faces the risk of a serious political crisis that could destabilize the ruling party and trigger an early election under the weight of the tough austerity measures to be implemented.

Greece’s international creditors are insisting 3.5 billion euros in contingency measures are legislated – on top of the 5.5 billion euro austerity package that is close to being sealed – in case fiscal targets are not reached by 2018.

The prospect of an additional set of extremely tough austerity measures – which have yet to be defined but have already been dubbed a “4th MoU” by the media – coming to parliament for approval is piling destabilizing pressure on the government.

Political analysts stress that there is great uncertainty over whether such a huge set of austerity measures worth almost 9 billion euros will be ratified by the Syriza MPs in parliament. Press reports suggest MPs have privately been saying the measures are too tough. The so called Group of 53 within Syriza has warned the 10 MPs it includes in its ranks could vote against the measures.

The apprehension amongst Syriza MPs could see them opt for a “heroic exit” scenario that will see the government resign and an early election called.

The Prime Minister, via his closest aides, has urged MPs to wait for the final agreement with creditors to be reached before determining their stance, maintaining that the conclusion of the review will trigger a rebound in the economy and the commencement of debt relief talks.

Prime Minister Alexis Tsipras does not believe Syriza MPs will dare to bring down the government and is mostly counting on the fact that the Group of 53 approved the MoU with creditors last summer; therefore it knew the consequences of the approval. Should they insist on differentiating themselves they could be asked to give up their seats by the Prime Minister.

Meanwhile, the government is trying to convince creditors that additional measures don’t need to be legislated and an agreement in principle to implement them should be enough to wrap up the ongoing bailout program review. Alexis Tsipras is currently trying to agree at political level with counterparts for this to be allowed.

The scenarios of an early election have made a strong comeback in recent days as talks with creditors become increasingly complex. Main opposition party leader Kyriacos Mitsotakis has also increased his calls for the government to resign in recent days, stepping up pressure on Tsipras.

Government sources deny there is such a possibility and also strongly refuse there is any chance of another party joining the Syriza-ANEL coalition to boost its numbers of MPs.

Instead, government sources point out the PM is likely to reshuffle the cabinet immediately after the completion of the bailout review and subsequent ratification of the fresh austerity measures in parliament. A sweeping reshuffle of the cabinet means Syriza MPs hope they could be offered a place in the new government if Syriza survives parliamentary votes on the new measures unscathed.