Creditors await Greek proposals after loan request

Prime Minister Alexis Tsipras faces one of his most difficult days in power on Thursday as he must finalize proposals for tough economic reforms and submit them to the country’s creditors by the end of the day to ensure Greece has a chance of launching talks on a new program and securing its place in the eurozone.

Tsipras is expected to either meet separately with key ministers, or possibly hold a cabinet meeting, to discuss the content of the proposals. Assuming they are approved, the proposals will then be set down in a detailed document that is to be compiled by Finance Minister Euclid Tsakalotos with the help of a French representative of the European Stability Mechanism and a European Commission official; the role of the foreign officials is to ensure that the proposal has the adequate detail to pass muster with the creditors.

Before that can happen though, Tsipras must overcome likely objections from within his cabinet. As for opposition from within SYRIZA, Tsakalotos is likely to be enlisted to try and talk round key cadres with whom he is said to have a good relationship.

However, the extent of the austerity that must be included in the proposal to satisfy creditors is certain to alienate the hard-left of the party who believe the landslide “no” vote in Sunday’s referendum essentially legitimized their calls for a break with creditors and a return to the drachma. 

Tsakalotos will on Thursday be focused on thrashing out the details of the proposal ahead of a Eurogroup meeting on Saturday where the proposal would be examined and a summit of European Union leaders on Sunday where a decision is to be made on whether to launch talks on a new program or on how to shield the rest of the EU from a Grexit.

The proposal submitted by Tsakalotos to the ESM on Wednesday requests a three-year loan program and pledges to legislate tax and pension reforms early next week but without offering details. Eurogroup President Jeroen Dijsselbloem asked creditors to determine whether the request could pose a risk to the eurozone’s banking system.

Speaking in Washington, International Monetary Fund Managing Director Christine Lagarde said Greece needs to continue reforms but the European lenders also need to lighten its debt load.

“The other leg is debt restructuring, which we believe is needed in the particular case of Greece for it to have debt sustainability,” she said. “That analysis has not changed. It well may be that numbers may have to be revisited but our analysis has not changed.”

There is growing concern among opposition parties that Tsipras is either unable or unwilling to reach an agreement with lenders. New Democracy leader Evangelos Meimarakis met with Tsipras and four other party leaders on Monday, resulting in the issuing of a joint statement. However, the conservative said on Wednesday that he refused to hold another meeting in private with Tsipras and called on him to address Parliament.

Meimarakis said that he wanted Tsipras’s comments to be officially recorded, which suggests that the New Democracy chief has become suspicious of the prime minister’s motives. Meimarakis also decided to send ex-ministers Dora Bakoyannis and Costis Hatzidakis to Brussels for discussions with officials there.

Former PASOK leader Evangelos Venizelos suggested that Tsipras is trying to trap the opposition parties so he can call snap elections without reaching any agreement with the institutions.

Tsipras met with the head of centrist Potami, Stavros Theodorakis, on Wednesday. Emerging from the prime minister’s office on Wednesday night, Theodorakis said that there were differences of opinion between him and Tsipras but that he would continue to back the premier’s efforts.

“There are people in Europe who are moving in the same direction as us but there are others who want us out of Europe,” said Theodorakis, adding that a new meeting of political leaders may take place in the next few days. Potami has reportedly been considering sending its own observer for the negotiations in Brussels.

Tsipras also met with President Prokopis Pavlopoulos on Wednesday night and assured him that the government is attempting to reach a "viable" deal. The prime minister spoke with Fofi Gennimata of PASOK by phone after meeting with the president.