Tsipras des­per­ate to hold coali­tion in­tact

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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