Tsipras indicates defiance to the end

As Greece’s talks with creditors reached a critical week, Prime Minister Alexis Tsipras suggested that he will take a defiant stance against pressure to further cut pensions and deregulate labour.

“The failure to reach agreement yet is not due to some supposed implacable, intolerant and incomprehensible Greek stance, but on certain institutions’ insistence on putting forth absurd proposals, completely indifferent to the Greek people’s recent democratic choice and to the [creditors’] public avowal to be flexible,” Tsipras wrote in an article published in Le Monde on Sunday.

Greece must meet a 300mn euro payment to the International Monetary Fund on Friday, which will be a test of its avowed policy to meet all debt obligations. 

Technical level talks at the so-called Brussels Group continued through the weekend. German Chancellor Angela Merkel was to hold a meeting on Monday night with French President Francois Hollande and European Commission President Jean Claude Juncker. They are rumoured to be preparing a compromise text which would be presented to the Greek government this week. 

Greece has compromised on key sticking points, Tsipras said in his article in Le Monde.

His government will agree to unify 13 main pension funds and put a stop to early retirement; but, he said, pensions have already fallen by between 20 percent and 48 percent during the crisis, and can fall no further.

The average Greek pension is now about 800 euros a month, but pension funds cannot meet their full obligations, because with unemployment at 26 percent, they don’t have enough contributions coming in. The government is topping up pensions to the tune of 1.5bn euros a month.

Tsipras also agrees to consult with the International Labour Organisation on a compromise labour reform.

His government has promised to restore minimum wage to 731 euros a month (it was cut to 586 euros in 2012), prevent employers from laying off more than two percent of their workforce in any month (the limit has been raised to five percent and creditors want it to go up), and bring back collective bargaining (salaries used to be set in talks between employers and unions on a sectoral basis; this was also abolished in 2012).

Greece’s creditors – the European Commission, the European Central Bank and the International Monetary Fund - say that the labour and pension measures taken under austerity governments have helped Greece recover most of its competitiveness. After six years of recession, Greece’s economy was set to grow by 1.5 percent in this year’s budget.

The January elections that brought the ruling leftwing Syriza party to power and sparked an overhaul of the fiscal adjustment programme creditors imposed on Greece have taken a toll on that forecast. The European Commission recently revised its outlook to 0.5 percent growth.

Tsipras was elected to negotiate less austere terms with creditors, and to extend the repayment of Greece’s debt.

He believes his country’s struggle to claw back lost sovereignty reflects in microcosm a struggle within Europe between two conflicting visions of federalisation:

“The first strategy seeks to deepen European unification in a context of equality and solidarity between its peoples and citizens,” he writes.

“The second strategy seeks the discord and breakup of the Eurozone and European Union… the first step in this direction is the creation of a two-speed Europe, in which the hard core sets tough austerity and adjustment rules, and appoints an uber-finance minister with unlimited powers… for those who refuse to submit to the new power, the solution is simple: Severe punishment. Compulsory austerity… Thus the new Europan power is built, with Greece as its first victim; in the minds of many, this is a golden opportunity to make an example of Greece to all those who might contemplate indiscipline.”

Greece is in a tight position. When the government was elected, it asked its creditors to finance a stress-free re-negotiation period of four-to-six months. They would service Greece’s debt repayments, giving it the opportunity to sign a new deal in June.

Instead, creditors told Greece to finance that re-negotiation itself, and cut off all further loan instalments until it concluded. This means that Greece has paid its way through domestic spending, and paid 17 billion euros’ worth of loan instalments since last July, on its own. Its cash reserves are running out, however, and it is thought that the country cannot or will not meet 1.6bn euros’ worth of repayments to the IMF in June without a deal. 

John Psaropoulos