Tsipras desperate to hold coalition intact
Prime Minister Alexis Tsipras needs to ensure his coalition, ranging from Maoists to Social Democrats, will back proposals he outlined on Monday that include eliminating early retirement options, raising the sales tax, increasing taxes on middle- and highincome earners and introducing a new levy for companies with annual profit of more than 500,000 euros, according to Bloomberg.
“The Greek government — somewhat surprising for a selfprofessed reform and antiausterity government — seems to have merely agreed to impose a lot more austerity through higher taxes, but offers relatively little commitment to genuine economic reform,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.
Tsipras is seeking to assuage the left flank of his party — some of whom want Greece to default on its debt altogether — by focusing on tax increases for companies and high-income individuals instead of spending cuts. The Left Platform, which holds about 40 seats in parliament and is composed of former communists and others closely aligned with trade unions, could defeat the government if its members vote against the plan.
European leaders said at an emergency summit in Brussels on Monday that Tsipras is finally getting serious after being criticised for lacking good faith in earlier talks. At the meeting, they agreed to step up the pace of negotiations to secure a breakthrough that leaders can sign off at the end of the week.
The possible deal got a resounding endorsement from Greece’s markets with government bonds and stocks rallying for the second day. The yield on the 2-year bond fell 313 basis points to 21.2%. The Athens Stock Exchange main index was trading 5% higher, after surging 9% on Monday.
“How the political process plays out largely depends on the number of parliament members the current government loses,” said George Saravelos, an analyst at Deutsche Bank AG.
Any substantial defections requiring the support of opposition New Democracy would open up the possibility of broader changes to the government or a referendum, said Saravelos, who calculates that between 10 and 40 Syriza lawmakers could dissent based on local media reports. Getting the support of New Democracy could be a challenge given the party’s probusiness stance and the proposed new corporate tax.
Tsipras “has to explain to the people why we failed in a negotiation and arrived at this result,” deputy parliament speaker and Syriza lawmaker Alexios Mitropoulos said on Tuesday in a televised interview on Mega. “After five months of negotiations, I consider that, at the very least, the negotiation didn’t succeed.”
His remarks illustrate the kind of internal opposition Tsipras will have to overcome to secure backing for an agreement that runs against his party’s pledge to end austerity. While the agreement could get parliamentary approval with the help of votes from the opposition, the government signaled on Tuesday that without enough support from its own ranks, it could lose the ability to stay in power.
“If it doesn’t have the parliamentary majority with it, then it can’t remain a government,” Gabriel Sakellaridis, Tsipras’s spokesman said.