Tsipras charges at creditors

Prime Minister Alexis Tsipras continued to face down Greece's creditors as he presented his agenda for government to parliament on February 8. 

Rather than softening his tone or de-emphasising some of the more controversial things his ruling Syriza party wants to do, he affirmed the manifesto upon which Syriza won 36 percent of the popular vote in the January 25 election. 

Tsipras told applauding MPs that a reviled property tax, Enfia, levied as an emergency revenue measure in 2011, will be scrapped this year; he reiterated that network industries and their infrastructure will not be sold off as creditors demand; and he promised to hire back some 3,000 cleaning ladies, school guards and university administrative staff fired under austerity.

"For the first time we are the centre of attention in a positive way, as a protagonist rather than as an extra. We are submitting proposals, not receiving orders via email," he said, in a reference to an email of measures outgoing finance minister Gikas Hardouvelis was proposing to creditors when the conservative-led government fell. 

In addition to these measures, Tsipras said his government will proceed immediately with plans to feed, house and provide medical coverage to hundreds of thousands of destitute households.

That leaves many wondering where the government will find the money to service the debt until a new deal is reached, as well as pay some 660,000 public sector salaries and continue to shore up the bankrupt pension system. Enfia alone raised 2.6bn euros in 2013. Over the longer term, Syriza says it will transfer the tax burden from the middle class and blue collar workers to the wealthy, by aggressively pursuing tax evasion and corruption in the state.

The short term

Tsipras’ finance minister, Yianis Varoufakis, has asked creditors for a four-to-six month truce period to talk. To weather that period without a default, he wants creditors to allow Greece to sell 10bn euros’ worth of debt on the open market (Greece has exhausted its debt sale limit under its oversight programme).

That is likely to be one of the key issues discussed at an emergency Eurogroup meeting on February 11, which is also to be attended by European Central Bank chief Mario Draghi and the managing director of the International Monetary Fund, Christine Lagarde. That would put all of Greece institutional creditors under one roof.

Tsipras said that Greece needn’t be so squeezed if his predecessor hadn’t been in such a rush to graduate from fiscal oversight. “From the contacts i have made with European Commission officials, I have acsertained that the they had suggested a six month extension, yet we insisted on the [two-month] 28 February expiry. The problem is the tight deadline and blackmailing of greece."

The rhetorical distance between Greece and its creditors is currently great, as the two sides position for hard bargaining. But on the substance it may not be as great as it appears. Departing from traditional leftist positions, Tsipras said that balanced budgets and a reformed, efficient state were not questions of kowtowing to creditors but matters of national sovereignty. Separately, Varoufakis has told creditors that Greece agrees with many of the austerity conditions Greece’s loans came saddled with.

"We want to vindicate expectations for a thorough reform of the state. This too is not a question of commitments to partners. Without this reform the debt will return," Tsipras said.

"We promised to fight against dysfunction and special interests. We did not build or manage this wasteful state," he said in a dig at the socialist and conservative parties, which have ruled Greece for the past four decades. "We are the only ones who can change it. We can implement the biggest institutional reform in the country’s history."

Tsipras has promised a new style of authority and he was determined to begin delivering. "We did not come to take over the privileges of power, but to abolish them and return them to their source – the Greek people," Tsipras said to thunderous applause from his bloc of 149 MPs. "We will immediately rid the state of special advisors and contracted services. We will abolish the fleet of 700 cars in ministries. We will immediatelly sell cars worth over 500,000 euros. We will sell one of three state jets. The example of sparse living must begin with us."

Tsipras' negotiating tactic is becoming clearer. It appears to be that he will charge at creditors while ignoring the odds Greece faces. For that to work, however, Greece has to convince partners that it is prepared to risk a return to the drachma. Varoufakis espoused such a move in 2012. With Syriza, therefore, the extreme option may be a true possibility.