Bailout talks gain pace amid tensions

Government officials and envoys representing Greece’s international creditors are to continue with tough negotiations on Monday in a bid to hammer out the outlines of a third bailout program even as opposition to further austerity is creating turmoil in SYRIZA.

Officials indicated that the talks were still at an “early stage,” with negotiations expected to delve into the thorny issues of fiscal adjustment, privatizations, bank recapitalization and structural reform, including pension overhauls, over the coming days.

The aim of both sides is for a new memorandum to have been drafted by August 11 so that a Eurogroup summit planned for that day can give its approval and the blueprint can be ratified by the parliaments of Greece and other eurozone countries. Ultimately Greece must secure fresh loan funding by August 20 when it must meet a 3.2-billion-euro debt repayment to the European Central Bank or again face default.

So far the biggest point of contention is over a third set of so-called prior actions that creditors want Greece to pass through Parliament this month. The government counters that the July 12 eurozone summit agreement does not stipulate the need for any further measures to be enforced.

But creditors appear to want another indication of good will and commitment to reforms before handing out any more money.

In any case, there is likely to be another vote in Parliament around mid-August – either on the new bailout program or on a new set of prior actions. In either case, Prime Minister Alexis Tsipras will struggle to gain approval without significant defections. Two sets of measures demanded by creditors passed into law last month but at the cost of dozens of defections from SYRIZA.

Tsipras managed to head off a revolt in his party at the end of last week, dissuading hardliners from holding a snap internal referendum on whether to continue negotiations with creditors. In the end, the majority of SYRIZA’s central committee backed Tsipras’s proposal for a party congress in September, after talks with creditors. But it remains unclear how long this fragile peace will hold as party radicals continue to oppose further austerity and some are said to be considering leaving SYRIZA’s parliamentary group.

Amid the upheaval, aides to Tsipras are advising snap elections in late September, immediately after the party congress. Others favor snap polls in November, after the first review of Greece’s third bailout.