Alexis Tsipras against internal and external “enemies” in pursue of a two-phase deal now

President Schulz seems to have a hard time to understand Syriza's vague vision for Greece during last EU Summit in April. From left to right, Mr Martin SCHULZ, President of the European Parliament, Mr Alexis TSIPRAS, Greek Prime Minister. (Council TVnewsroom, 23/04/2015)

President Schulz seems to have a hard time to understand Syriza’s vague vision for Greece during last EU Summit in April. From left to right, Mr Martin SCHULZ, President of the European Parliament, Mr Alexis TSIPRAS, Greek Prime Minister. (Council TVnewsroom, 23/04/2015)

The Greek government and particularly the Prime Minister Alexis Tsipras is currently looking at a deal with the creditors but is facing both interior and exterior “enemies”.  Mr Tsipras had extensive talks yesterday in Athens with the government’s officials in order to inform them about the negotiations’ progress.

The Finance Minister of Greece – “pop star”, Yanis Varoufakis, mentioned that the negotiations are going very well and the desired agreement will happen within a week’s time in an interview to a Greek TV channel last Monday. However, his Dutch counterpart stated that it is literally not possible to come to a mutual agreement within this week.

A great part of the deal will be sealed in a political level during the EU summit that is going to take place in Riga on May 21-22 where Angela Merkel, Francois Hollande and Alexis Tsipras will be present and possibly meet on the matter. This would be a great opportunity to discuss the progress that has been made so far and how close are both parties to reach an agreement that would be equally beneficial.

One of the main issues that the negotiating team of Alexis Tsipras is now discussing with the creditors is the increase of the Value Added Tax (VAT). Greece’s overall goal though in this agreement is to implement reforms that will not affect the severly hit by the crisis low and middle class of the Greek citizens who struggle to make ends meet. Instead Syriza’s government is giving its last fight trying to secure reforms that will bring actual growth to the economy.

Tsipras’s resistance

Greece would need a prime minister who will be able to face all difficulties from wherever they come from. The time is now for Mr Tsipras to take the matter in his own hands and resist to the views of the left-wing “hardcore” members of his government and at the same time to the mandatory austerity reforms that the creditors impose.

The members who oppose to the government’s policy are quite a few composing a substantial force against the governmental work. Particularly, the deputy Costas Lapavitsas bluntly stated in an interview given to “The Press Project” that the Greek economy will recover in a few months if the country returns to its old currency; the Drachma! Such statements from the governmental party reveal that the situation is reaching critical levels which rmake it very difficult to keep SYRIZA unified.

After a 5-hour long meeting with the parliamentary group of SYRIZA, the Greek prime minister formulated that the government agreement will come into two phases. The first and current one will boost the economy by providing the last tranche of 7.2 billion euros and the second one will be covering the deal for Greece’s debt and the framework that the two parties will proceed after the end of June.

However, this two phases approach contradicts to what the Greek government was saying just a couple of weeks ago, supporting a one and only deal in all matters. It seems that as the time presses, Greece fails to keep its promises once again. Let’s wait and see if Tsipras will be unable to keep his pre-election announcements regarding the party’s “red lines” by the end of this summer.

Varoufakis vs. Dijsselbloem

Mr Varoufakis, on the other hand, was very optimistic about the progress of the negotiations with the three institutions in contrast to the president of Eurogroup and Dutch Finance Minister Jeroen Dijsselbloem. The Greek Finance Minister stated two days ago that the deal will be reached within this week but his Dutch counterpart mentioned that it is highly unlikely to come to a conclusive agreement in the aforementioned timeframe.

The latter acknowledged the progress that has been made so far but outlined that the final decision for the Greek debt is due to the negotiations context with the European Commission (EC), the European Central Bank (ECB) and the IMF. Furthermore, the Dutch Finance Minister was quite certain yesterday that the next EU summit on Friday will finally secure a deal for Greece.

Riga’s summit: A Greek deal’s forerunner

This week’s summit in Riga is crucial not only for the relationships of the EU with its Eastern Partners but also because it will be a great chance for the EU leaders to meet and discuss about the long-lasting issue of Greece’s debt. Thus, the German Chancellor together with the President of the EC and France’s President will talk about the progress of the negotiations in Brussels group level and how will be possible to make an agreement by the end of May in order to “save” Greece from an imminent limbo.

The leaders of Germany and France jointly stated during their meeting in Berlin that in principle they desire and pursue an agreement with the Greek government by the end of this month since that was the anticipation of the agreement made on February 20 this year. More specifically, Angela Merkel stated that: “I’d say the talks need to speed up, rather than that they are going too fast, and we hope the relevant forum – the Brussels Group – can make clear progress because the agreement in February was that a program should be set up by the end of May”.

VAT increase: How it affects the economy

One of the issues that is now on the table is the Greek VAT. The problem lies in the fact that the three institutions propose higher VAT rates in order to bring more tax revenues to Greece compared to the ones that the Greek government suggests. Today’s Brussels group meeting will reveal the intentions of both parties to the conclusion of a permanent or temporary agreement.

The Greek team is believed to have prepared a modified version of their VAT increase proposal and will present it to their creditors’ technical team. Will it be enough to bring both parties closer to signing a deal or Mr Tsipras will have to push things by conscripting his negotiating skills against Angela Merkel and Francois Hollande in the next EU summit?

The Greek citizens and economy will eventually be affected by this imminent VAT increase. It is not clear though how this rise will bring growth and provide extra liquidity to the state the moment that tourism will be significantly influenced in a negative way and once more the poor will become poorer.

All in all, the VAT matter is only the tip of the Greek iceberg. It does not appear to be a great obstacle in the negotiations but under the surface a great mass of ice between Brussels and Athens has been making prospects over the Athenian sky inescapably gloomy.

Follow Chris on Twitter @CAnyfantis

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