Coalition scrambles to legislate measures as creditors keep up the pressure

With the government’s hopes of wrapping up the second review of its third bailout by Monday’s crucial Eurogroup all but dashed, Prime Minister Alexis Tsipras returns to Athens from Cuba Thursday to re-evaluate the way forward as aides say that negotiations between creditors have reached an impasse.

Despite its insistence that it will strive for a deal until the eleventh hour, the latest developments have taken the wind out of the government’s sails, as its plan, to conclude the review by the end of the year to pave the way for its key demand of debt relief negotiations, is beginning to unravel.

Instead it is faced with the prospect of signing on to even more austerity measures beyond 2018 – which observers say would be tantamount to a fourth bailout, no matter what it is called.

The government has balked at introducing new austerity – demanded mainly by the International Monetary Fund as a condition for its participation in the Greek bailout. However, given its acrimonious rhetoric, it will have a hard time climbing down without losing face vis-a-vis an increasingly disillusioned electorate.

“We have made it clear that there is no scope, either political or economic, for further measures beyond 2018,” government sources said, even though there is growing concern in Athens that it will be forced to accept demands for austerity beyond 2018 by the IMF, and Berlin for that matter, if it is to receive debt relief, which has become something of a holy grail for the leftist-led coalition as it struggles to stay afloat amid lagging poll numbers.

The stakes couldn’t be higher for the government as it could become the first to sign two bailout agreements, having swept to power in 2015 on platform to scrap them.

With Greece under pressure to move on with reforms, the government has been busy drafting legislation on a series of prior actions and pushing it through Parliament.

On Wednesday, coalition MPs approved a bill that bundles together several actions including a new regulatory framework for businesses operating in Greece. The day before MPs approved another bill simplifying procedures for new businesses being set up in Greece.

The sessions in Parliament have been tense with much criticism being leveled against the government by opposition MPs. There was an outcry Wednesday after Finance Ministry officials tried to slip a legislative amendment through Parliament at the end of a long discussion. Opposition MPs reacted angrily, chiefly because the amendment ran to several pages and was sprung on them. The amendment strung together a series of reforms including the approval of European Union structural funding for state projects.

The government is expected to submit a third bill of prior actions in Parliament Thursday or Friday. According to sources, it will include a plan to extend the use of credit cards, incentives for the return of bank deposits to Greece from abroad and a new bankruptcy code.