ATHENS (Reuters) - Greece’s government prepared reform measures on Sunday to secure a financial lifeline from the euro zone, but was attacked for selling “illusions” to voters after failing to keep a promise to extract the country from its international bailout.
Leftist Prime Minister Alexis Tsipras has insisted Greece achieved a negotiating success when euro zone finance ministers agreed to extend the bailout deal for four months, provided it came up with a list of reforms by Monday.
Greeks reacted with relief that Friday’s deal averted a banking crisis which fellow euro zone member Ireland said could have erupted in the coming week. This means Tsipras has stood by one promise at least: to keep the country in the euro zone.
Tsipras maintains he has the nation behind him despite staging a climbdown in Brussels. Under the deal, Greece will still live under the EU/IMF bailout which he had pledged to scrap, and must negotiate a new programme by the early summer.
“I want to say a heartfelt thanks to the majority of Greeks who stood by the Greek government ... That was our most powerful negotiating weapon,” he said on Saturday. “Greece achieved an important negotiating success in Europe.”.
Top Marxist members of Tsipras’s Syriza party, a broad coalition of the left, have so far been silent on the painful compromises made to win agreement from the Eurogroup.
But veteran leftist Manolis Glezos attacked the failure to fulfil campaign promises. “I apologise to the Greek people because I took part in this illusion,” he wrote in a blog. “Syriza’s friends and supporters ... should decide if they accept this situation.”
Glezos, a Syriza member of the European Parliament, is not a party heavyweight. But he commands moral authority: as a young man under the World War Two occupation, he scaled the Acropolis to rip down a Nazi flag under the noses of German guards and hoist the Greek flag, making him a national hero.
A government official said Glezos “may not be well informed on the tough and laborious negotiation which is continuing”.
Finance Minister Yanis Varoufakis said the reform promises would be ready on Sunday and submitted to Greece’s EU and IMF partners in good time. “We are very confident that the list is going to be approved by the institutions and therefore we are embarking upon a new phase of stabilisation and growth,” he told reporters late on Saturday.
A government official said the reforms would include a crackdown on tax evasion and corruption.
The Brussels deal opens the possibility of lowering a target for the Greek primary budget surplus, which excludes debt repayments, freeing up some funds to help ease the effects of 25 percent unemployment and pension cuts. It also avoids some language which has inflamed many Greeks, angered by four years of austerity demanded by foreign creditors.
In the deal the hated “troika” of inspectors from the European Commission, European Central Bank and IMF, which monitors compliance with Greek bailout undertakings, is referred to as “the three institutions”.
Tsipras declared Greece was “leaving austerity, the bailouts and the troika behind”. Nevertheless, government plans must still be approved by the re-named troika, although Tsipras won election last month on a pledge to end the humiliation of foreigners dictating Greek economic policy.
The opposition pounced on the climbdown from promises that have raised huge expectations among Greeks. “No propaganda mechanism or pirouette can hide the simple fact that they lied to citizens and sold illusions,” said Evangelos Venizelos, leader of the socialist PASOK party.
Venizelos was deputy prime minister in the last conservative-led coalition which succeeded in raising funds from financial markets with two bond issues last year. With the economy showing signs of growth after a depression which wiped a quarter off GDP, it had prepared to exit the bailout programme but lost power to Syriza on Jan. 25.
Friday’s agreement merely buys time for Greece to seek a long-term deal with the Eurogroup. Euro zone members Ireland and Portugal have already exited their bailouts, but Greece faces yet another programme - on top of bailouts in 2010 and 2011 totalling 240 billion euros - when the extension expires.
“Once you get them into the safe space for the next four months, there’ll be another set of discussions which will effectively involve the negotiation of a third programme for Greece,” Irish Finance Minister Michael Noonan said on Saturday.
Tsipras did much of the negotiating for the deal rather than Greece’s Eurogroup representative, Varoufakis. But sources close to the government said this reflected Tsipras’s need to win backing from Syriza’s left wing and his right-wing coalition partner, the Independent Greeks party.
Their support will be crucial in maintaining government unity during negotiations for the long-term agreement.
Likewise Tsipras needs to keep public support. Costas Panagopoulos, who heads the Alco polling firm, said the initial reaction was relief that Greece would stay in the euro. Greeks might even accept Tsipras’s change in language and assertions that the troika is no more. “It may sound odd but this could turn into political gains,” he told Reuters.
Writing by David Stamp; Editing by Giles Elgood