Tsipras Faces Party Revolt In Bid To Push Debt Deal Through Parliament

Tyler Durden's picture

On Monday evening in “Greece Capitulates: Tsipras Crosses ‘Red Line’ Will Accept Bailout Extension,” we outlined the political battle facing Alexis Tsipras in the wake of the Greek PM’s move to effectively strike a deal with creditors that includes higher taxes and restrictions on early retirements. The agreement, which some reports suggest came with an implicit assumption about the necessity of extending the country’s second bailout in order to bridge the gap between payments due to creditors over the coming weeks and final discussions around a third program, has not been received well by Syriza party hardliners. 

To be sure, no agreement with creditors would have satisfied the more radical members of the party, many of whom believe the best option for Greece is to default and return to the drachma — these lawmakers contend redenomination would not be as economically catastrophic as the EU would have them believe. If Tsipras cannot rally enough support for the new proposal, a political shakeup may be necessary. Here’s Reuters with more:

Greek lawmakers reacted angrily on Tuesday to concessions Athens offered in debt talks and parliament's deputy speaker warned the proposals would struggle to win approval, puncturing optimism that a deal to lift Greece out of crisis might be quickly sealed..

 

"I believe that this program as we see it ... is difficult to pass by us," Deputy parliament speaker and Syriza lawmaker Alexis Mitropoulos told Greek Mega TV on a morning news show.

 

If parliament does fail to back the latest offer, which included higher taxes and welfare changes and steps to curtail early retirement, Tsipras might be forced to call a snap election or a referendum that would prolong the uncertainty.

 

"The prime minister first has to inform our people on why we failed in the negotiation and ended up with this result," Mitropoulos said. "I believe (the measures) are not in line with the principles of the left. This social carnage ... they cannot accept it”..

 

"If (the government) does not have the parliamentary majority, it cannot remain (in power)," government spokesman Gabriel Sakellaridis told Mega TV.

 

Ahead of emergency talks on Monday in Brussels, Tsipras had spent hours with his cabinet in an apparent attempt to secure their backing.

 

"The government has fallen into a trap, I don't know to what extent this can be implemented," Pavlos Haikalis, a deputy with Syriza's junior coalition partner, the Independent Greeks, told Antena TV.

And more from Bloomberg:

While the government’s plan still falls short of creditors’ demands, some Syriza lawmakers already described it as a capitulation.

 

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 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.

 

“Every lawmaker has a personal responsibility, to recognize and understand not just the urgency of the moment, but the urgency of the whole project,” Gabriel Sakellaridis, Tsipras’s spokesman, said in an interview with Mega TV. In a public relations blitz, Sakellaridis gave at least three television interviews in Athens Tuesday morning.

And once again, here’s Deutsche Bank to explain the process:

Subject to further progress this week, focus is likely to shift very quickly to the Greek domestic political front. Disbursements for Greece ahead of the IMF tranche due at the end of the month will require domestic parliamentary approval. It is likely that the Greek PM would first attempt to obtain approval from the SYRIZA party's 200-strong Central Committee before bringing an agreement to parliament. In the event of failure at the party level, a referendum would likely be called. In the event of party approval, a vote would be likely taken to the parliamentary floor. Depending on the process adopted, such a vote may take between 2 days to a week. 

It will remain a major challenge for the Greek PM to successfully pass a potential agreement through parliament. Local press reports that 10-40 SYRIZA MPs are likely to dissent (the government has an 11 MP majority), while overnight the Independent Greeks junior coalition partner (12 MPs) has also raised the possibility of withdrawing from government. How the political process plays out largely depends on the number of MPs the current government loses. A loss of less than thirty parliamentarians may force a change in coalition to include the two small moderate parties in parliament (PASOK and the River) jointly controlling 30 MPs. More substantial losses requiring the support of major opposition party New Democracy would open up the possibility of broader changes to the government or a referendum.

Finally, here is Barclays' flowchart:

Again, we see that a government shakeup may be necessary to get the agreement through parliament and indeed, a reshuffling that serves to align Greece more closely with creditors will be welcomed in Brussels and would of course mean that the troika will have succeeded in using financial leverage to subvert the democratic process.

In the mean time, Tspiras must navigate between Scylla and Charybdis (to use a uniquely Greek metaphor). On the one hand, squandering Monday's progress with creditors would likely spell the end of the Greek banking sector as Mario Draghi would come under enormous pressure from Berlin to curtail emergency funding. On the other, pushing the new proposal through parliament will cost Tsipras politically, as hardliners will likely attempt to gather public support by claiming the PM has abandoned his electoral mandate. For Tsipras, the decision to fold to Brussels and the IMF (albeit with a set of proposals that don't entirely match what creditors were looking for) likely came down to this: remaining defiant and allowing Greece to return to the drachma would have made Tsipras a national hero for a time, but the acute economic hardships that Greeks would subsequently suffer would likely have led to his ouster at some point, so chancing a referendum or snap elections now in order to avert an imminent economic collapse is the lesser of two evils and likely gives the PM the best chance of retaining power over the long run.

In any event, Tsipras' new proposal was enough to appease the ECB, which once again lifted the ELA cap on Tuesday, ensuring that Greek banks could meet withdrawal requests for another day and in the process tacking another €1-2 billion onto Germany's TARGET2 credit. Meanwhile, analysts are looking past June and asking what happens next. Here's how UBS sees the situation playing out (via Bloomberg):

If there’s no agreement this week, Greece won’t be able to pay the IMF and in turn won’t receive cash due from the fund.

 

If there is an agreement, Greece will eventually need a third bailout; estimate potential size ~EU30b with partial restructuring of OSI debt.

 

Don’t think there’s appetite for another large number among creditors.

 

This amount would enable Greece to partly repay ECB, the most expensive debt they owe.

 

ECB could release SMP profits of around EU9b, enabling government to pay around half of outstanding IMF loans (also quite expensive) and reduce interest costs.

 

Taking out relatively cheap ESM loans would help debt sustainability. Any new deal should reduce multiple payment deadlines over next few years.

 

Can’t exclude IMF being repaid ahead of schedule and leaving Greece program early; not central case given the numbers involved. May agree something like in Ireland, where Greece is allowed to repay IMF earlier where possible.

Obviously the next several days will be critical, as Brussels will watch closely to see if, after finally extracting concessions from Tsipras, it will be one step forward on the road to transforming a revolutionary into a pandering technocrat and two steps back towards unruly leftist radicalism. 

*  *  *

Here's more on the "deal" from KeepTalkingGreece:

Eurogroup meetings, Institutions meetings, Euro Leaders meetings. Monday’s race between Greece and the creditors ended … early Tuesday without a deal. But with a perspective for a deal. And a bombastic package of austerity measures worth 8 billion euro for 2015 and 2016.

The exhausted Euro Leaders exited the summit with statements one could hardly understand what was the real substance behind. Chancellor Merkel for example spoke of “new Greek proposals that were a good starting point for further discussions”, while she claimed that they did not know “if Greek debt sustainable” despite the 5 months of negotiations.

IMF’s Lagarde repeated the usual “A lot of work has still to be done.”

 

Others said that a deal has to be reached in the next 48 hours.

 

EC’ Juncker: “I’m convinced that we will find an agreement this week, for the simple reason that we have to find an agreement this week. It’s not the right moment to discuss debt relief.”

 

Germany’s Merkel also tried to sidestep the crucial issue of debt relief and told reporters after the summit: “We will now that the Greek debt is sustainable, we will know more on Wednesday night.” She stressed that “No further credits can be extended until the second bailout terms are complied with.”

 

France’s Hollande said also that “extension of bailout programe, debt restructuring will only come at a second stage.”

At the end of the Euro gibberish it was suggested that Greece’s creditors had found the additional proposals as a basis for a discussion that should continue with a Eurogroup meeting on Wednesday and another Euro Leaders Summit on Thursday. Target is an “austerity for cash” deal this week and thus before the June 30th when Greece is expected to pay €1.2 billion to the IMF. The two sides have still to agree on several issues and creditors expect to demand more “austerity measures” from Greece.

The creditors made it clear that the Greek government has to pass the deal through the Greek parliament first and then be allowed to receive the life-saving bailout money: 7.2 billion euro bailout tranche.

The Greek proposal leaked to the press on Monday literally shocked every Greek and especially the SYRIZA lawmakers and its junior coalition partner Independent Greeks.

Two SYRIZA MPs said that they will not vote for the austerity package respectively for the deal. Mitropoulos is well known for his “populist” and Michelogiannakis.. well.. he is known for having started a hunger strike in solidarity with Syrian refugees and in the breaks he went for a coffee.

“My personal view is that these measures cannot be voted, they are extreme and antisocial,” said Syriza MP and vice president of the Greek parliament, Alexis Mitropoulos.

 

“An agreement based on the Greek government’s proposals is a tombstone for Greece, and will not pass from Syriza [party bodies],” said Syriza MP Giannis Michelogiannakis.

 

Communist Tendency, a far-left faction within Syriza, issued a statement urging Syriza MPs to vote against the agreement. (via euractiv.com)

From the Independent Greeks front it has been said that the “Value Added Tax on the islands was a “red line and casus belli.” However this issue has not been fixed yet in Brussels.

Government spokesman Gavriil Sakellaridis said that if the deal will not receive the government majority votes then “only option is elections.”

However it is too early judge about the voting. Sakellaridis said that “the deal” has to be brought to the Parliament before the end of the week, so that lawmakers be informed.

A voting could take place on Sunday.

Some of the revenue increasing  measures are “tough” and include V.A.T and tax hikes as well as reductions in net income for pensioners and employees.

Some SYRIZA MP like Nikos Filis said last night in an effort to justify the measures that “there are not pension cuts”. But increasing the health care contribution and the VAT in food will effectively leave thousands of low-pensioners with less money available.

Anyway, the VAT issue is been expected to be taken up at Wednesday’s Eurogroup.

Another issue at the focus of criticism in the media today is the increase of contributions in social security. Employers complain that the increase will put obstacles to hire personnel.

Meanwhile, the ECB increased the Emergency Liquidity Assistance to the Greek banks on Tuesday morning. On Monday M?rio Draghi reportedly told Alexis Tsipras during a face to face meeting that “the Greek banking system is safe with Greece in the program”.  The program ends on June 30th 2015.

To conclude: There is no deal but an outline of a deal. Greek Prime Minister Alexis Tsipras could hardly accept more austerity measures. After the Euro Summit, he told reporters: “We want a substantial and viable solution” and “The ball is in the court of the European leadership.”

What will happen if creditors demand more measures and Greece reject them? then the ball is indeed in Merkel’s court, as Tsipras has hinted before the Euro Summit.

Suprisingly NOT is that the negotiations do not take into acocunt real structural reforms to overhaul the notorious handicaps of the Greek operating system but instead they focus on pour revenue increasing measures.

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Headbanger's picture

Ain't gonna happen Mister T.

FOOL!

Keep watch on Greek 10 yr bond yield for what's really going on:

http://www.investing.com/rates-bonds/greece-10-year-bond-yield-streaming...

Bund yield as well:

http://www.investing.com/rates-bonds/euro-bund-streaming-chart

Momauguin Joe's picture

Banksters bought off the PM. Every man has his price.

Ayreos's picture

Throw those Greek deadbeats out of Europe already. -says Wolferl

Yes, for their sake!

Bearwagon's picture

Not just their's, man, not just their's ...

MonetaryApostate's picture

Greece reminds me of a bunch of sailors on a boat with broken sails & sharks swimming all around, with nowhere to turn or go, and quickly running out of supplies...

VinceFostersGhost's picture

 

 

 

More other people's money.....we can do this to infinity.

NoDebt's picture

Long way around the barn to arrive at the same "deal" that was in place months ago.

Hype Alert's picture

But just look how many times the market rallied on it.  I'd like to see one of those ZH charts on how many points were added to the index every time the machines read another rescue headline.

SamAdams's picture

Greeks elected RAND PAUL as prime minister and expected something different?  wow....

SilverDOG's picture

EU is in the rubber lifeboat. 

 

The difference is...

Anasteus's picture

On one side I can understand Tsipras; the exit would drastically influence the way the Greeks are heading now and they might feel not to be prepared for such a U-turn as a nation. Hence, Tsipras could do something that would most likely be perceived as an illegitimate act. Without stronger support from the public Greece has no chance to get over the hard times after the exit and succeed in the long run. The properly organized plebiscite listing all pros and cons would therefore be appropriate.

On the other hand, prolonging the agony of further can kicking makes no sense whatsoever. The Greek government relies on some miraculous change in EU apparatchiks' minds, but this will never happen unless Greece steps in and starts addressing its affairs on its own. Waiting for Godot won't bring anything new to Greece, that's a transparent EU tactics. Paradoxically, the situation can indeed change the EU attitudes in favor of Greece but not before unilateral resolute actions on the Greek side first. The Greek society has a great opportunity to finally stand up and start conducting its own country. After all, that's what we'd naturally expect from a self-reliant adult nation and the way how to regain the lost dignity the Greeks so often cry out for.

Haus-Targaryen's picture

“Every lawmaker has a personal responsibility, to recognize and understand not just the urgency of the moment, but the urgency of the whole project,”

There is this it again "the whole project" e.g., Greece is about to get fucked, hard again, for the good of the project.   

When is it time for the project to get fucked and hard, or has Greece also drunk the "Europäische Einheit über Alles" bullshit?  

If Tsipras is going to cave to keep "the project" intact, then he needs a new mandate from his people, else he is just a worthless sack of flesh and bones, and is essentially a walking version of Schäuble.  

LawsofPhysics's picture

Hey, "flesh and bones" still makes good fertilizer, not exactly "worthless"...

Bay of Pigs's picture

I suggested yesterday the Greeks try a new approach and give him the Mussolini treatment.

Just another bankster turncoat running their gov't.

Kirk2NCC1701's picture

Or, if you're by the sea, they make for excellent Chum for Crabbing. 

new game's picture

spine or no spine. tic toc...

ThirdWorldDude's picture

Notice how they dubbed the 'new' program "Austerity for Cash"? Sounds much better than the originally proposed "Blood for Cash" and the author gets bonus points for the doubleplusgood doublespeak.

new game's picture

i would gladly trade austerity for cash. just the minimalist speaking. where is my free cash i will never be able to pay back, oh that's right i got to suck a goldman dick first- no thanks, ha...

NoDebt's picture

Haus-  No way anybody can have a mandate from his "people".  When your people are the FSA, as most of the western world is now, there can be no talk of a sacrifice.  Not even for a longer term gain.  

Haus-Targaryen's picture

Here is the thing -- 

If the Syriza government collapses, the Independent Greeks will likely also fall out, meaning Syriza will likely lose his majority within his own party as well ... e.g., a Syriza split.  

That would make New Democracy the largest party, with a de-facto ND government, which is pro austerity.  However they wouldn't have the size to create a government all their own.  

They'd have to coalition again -- but with who?  The anti-EUR group gets larger and larger.  

The only group I could see is a moderate Syriza (e.g., PASOK) with old PASOK and ND.  

On the other side, you'd have Golden Dawn, new Syriza, KKE and the Independent Greeks -- anti-EUR.  

If the top group of parties cannot get more than 50% -- you'll have a hung parliment and #2 (e.g., Golden Dawn) will get the opportunity to get a government together.  

NoDebt's picture

Impossible to predict how things would turn out if Syriza collapses.  The deck would likely get reshuffled in ways we couldn't predict from where we are sitting today.  Almost certainly things would get "worse", however you care to define that.  And "worse" plays right into the banker's hands.  Division and strife keep them in their position of power.  You saw how long it took them to rein in Syriza which came to power with a "mandate".  An impossible one (because it would have required sacrifice), but one where they clearly, for a while, had some political capital to use.  The bankers freaked out, went full Machiavelli on them and now, at this late date, have finally pulled them back in line.  Bankers would be in an even better position to dictate terms if they were facing some weak, cobbled-together coalition government.

Haus-Targaryen's picture

"Hey, we are the coalition called 'We're gonna leave the EUR tomorrow, formally default on all our debt, get a Greek court decision permanently invalidating all debt, and then call new elections coalition'"

NoDebt's picture

Exactly.  Who wouldn't vote for that?

Haus-Targaryen's picture

I don't think you understand how the coalition system works.  

Each party has its own platform, on which it runs and garners votes.  I am no longer curious about Greek political position aside from the pro EUR anti EUR positions.  

If Syriza collapses then ND is the next largest Greek party, which is pro EUR.  Because it is largest it gets an extra 50 seats in the parliment per Greek law, and if it can get 150 seats in the parliment it has an absolute majority, and if it doesn't it can coalition with other parties to get their coalition.  The number of pro-EUR parties with which ND could coalition is getting ever smaller.  

Thus, if ND cannot form a government, then #2 gets the option of creating a government.  At this point, if the anti-EUR parties can get together for a period of 3-4 weeks to pull off all the legal stuff to exit, then after Greece exits one of the junior coalition partners calls a vote of no confidence, where they vote for no-confidence, and then a new government can be elected with no EUR baggage to deal with.  

mtl4's picture

Exactly right, Greece is about to cross the event horizon no matter what party is in power they simply can't afford to continue to service bond holders over the needs of the people or you end up with full blown revolution.  Any poltical parties are likely conspiring on how to best utilize this to their own advantage in order to come to power (the people are just starting to come to their senses of wanting out of the Euro).

Dewey Cheatum Howe's picture

There is nothing 'democratic' about coalition governments except that they are arbitrary and capricious like all forms of law except for natural law something Greece left behind at least a 1000 years ago.

The only difference between a dictatorship and coalition government is the people know the rules are arbitrary and capricious and can be changed at any time under a dictatorship. They believe otherwise when it is a coalition or any sort of representative government.

You can't pull that shit with natural law.

Philo Beddoe's picture

No pain no gain. 

Just do it. 

Really, this whole thing needs the right push from Madison Avenue. 

Off myself for a better tomorrow. 

Something like that...with tits and kittens. 

rejected's picture

Correctamundo.......

Steal what you can from your neighbor is the name of todays game.

 

Irishcyclist's picture

It takes a huge amount of courage to do the right thing. I don't know whether or not there are politicians anywhere who possess sufficient courage to do what needs to be done and to tell the EZ/EU where to go.

Whatever else you may say about him, Hitler rightly rescinded all of the armistice "agreements" because Germany was being royally screwed by the "allies" after WWI and following Versailles Treaty.

A greek leader needs to come forward and say all agreements are off the table.

 

 

SilverDOG's picture

Politicians may have courage, do they see beyond mandated choices.

That choice I believe, has been forgotten.

Hans-Zandvliet's picture

Handy site indeed, thank you.

Hans-Zandvliet's picture

Handy site indeed, thank you.

Philo Beddoe's picture

Fuck this guy. Pusscake. 

skistroni's picture

If you would decide one day "Fuck it, let's go back to the drachma" and your tech guys reply to you "Listen, we need about 6 months to refactor all the banking IT, reprogram all the Point-of-Sales machines, develop the Tax collection web applications, desing the new banknotes, get the note-printers maintained and buy paper and printing supplies AND DO ALL OF THE ABOVE IN UTTER SECRECY ELSE WE'RE FUCKED INDEED" then you would most probably do what you have to do in order to be called a pusscake too. 

We simply cannot leave the Euro at this time. We are in day 0 of those 6 months. Unless we decide, that it's fine to eat each other after all. 

Haus-Targaryen's picture

If Tsipras didn't immediately start that six months 5 months ago when he got in office, he is not only a pusscake but a fucking moron as well. 

NoDecaf's picture

Snack now or feast later. Bon appetit.

skistroni's picture

That's exactly why I'm for staying in the Euro, although I know we could be better off with the Drachma. Nobody here has a fucking plan, they all make it up as they go. 

Haus-Targaryen's picture

In 20 years if Greece does not leave the EUR -- Rwanda will be better off. 

Marco's picture

Internal deflation might be a harder road to travel than monetary devaluation ... but it's hardly impossible. Hell most of ZH thinks internal deflation should be the default option (it's the only option with gold currency too, cross of gold and all that).

 

Philo Beddoe's picture

Can't stand the heat? Stay out of the pussy. 

skistroni's picture

Yeah, whatever, just don't expect GREXIT "any day now". Not going to happen like that. 

pitchforksanonymous's picture

This Central Bank Circle Jerk is getting tiresome . . .

Philo Beddoe's picture

Any pont reading Greece articles? Franki Valli is the only guy who is enjoying this song. 

Renfield's picture

<<Any pont reading Greece articles?>>

No, not on this site. Tyler's coverage is generally full of unquestioning belief in MSM sources, and quotations from eurocrats -- but nothing concrete from the Greek side, and almost no realistic analysis. This article is no exception. No wonder readers on this site are always confused, always seem to expect A New Deal just around the corner, and are invariably disappointed.

Try Mish for much better coverage and analysis. This coverage is idiotic.

new game's picture

or none for a clear and free mind, just a thought...