What Tsipras will propose to Dijsselbloem

The government will argue that a win-win situation can be found that will allow Greece to recover while securing the greatest possible return for its lenders.

Pavlos Zafiropoulos | 30 Jan. 15 (14:47) POLITICS
‘We will not damage all inclusive resorts’
Negotiations with European partners: Day one.

That is likely what Alexis Tsipras has written into his calendar about today during which he will have his first key meeting with Eurogroup head, Jeroen Dijsselbloem.

The meeting comes on the heels of Tsipras’s meeting yesterdat with the president of the European parliament, Martin Schulz. That meeting was high on symbolic significance, with both sides stressing that communication channels are open. But today is where the rubber really meets the road for the first time in the negotiations between the new Greek government and its European lenders over the debt and Greece’s financial future.

As Alexis Tsipras’s close aides repeatedly stress, there is no time to waste, and the negotiating team has been busy preparing the package of Greek proposals that the prime minister will submit to Mr Dijsselbloem.

Specifically Tsipras will seek to persuade the Eurogroup head that a win-win solution is possible while Yanis Varoufakis, the new Greek Finance Minister will outline his proposed ‘bridge programme’.

What the Greek proposal entails

One of the key tasks for the Greek side will be to dispel notions that Alexis Tsipras’s government is opposed to reforms and that it plans to return to the free-spending ways of the past. However it will argue that the current path of ruthless austerity is failing.

As such together with proposals to reduce the overall debt and the cost of servicing the debt, the Greek side is expected to include proposals for structural reforms as well as plans to trigger economic growth.

The key goal for Alexis Tsipras is to free the country and the economy from asphyxiating austerity.

The Arguments

But how will the Greeks convince Brussels that Athens does not plan to return to its bad old ways of doling out cash even as it reverses the course of large privatization projects?

Alexis Tsipras will argue to Jeroen Dijsselbloem’s team (which will include key technocratic advisers well acquianted with the Greek bailout programs) that the Greek economy’s return to growth will create wealth in the country which will be taxds in a more logical and progressive way thus bringing in valuable revenue to the bare state coffers.

In their joint press briefing yesterday, Martin Schulz agreed to the need crack down on tax evasion by the wealthy in the country. Alexis Tsirpas will argue that his government is willing and able to reform the tax system and will take on the difficult issue of tax evasion and tax avoidance as a top priority to generate funds.

What Tsipras is likely to maintain is that such efforts have lagged in Greece even during the years of the crisis due to the close links between the governing parties of New Democracy and PASOK with the oligarchs. SYRIZA, on the contrary, is determined to take these large interests head on, to which it is not beholden.

Along the same lines the government will argue that it is not opposed to a series of reforms, in particular those that seek to put an end to the clientelist state (which it will say it is not to blame for), implementing robust auditing mechanisms and increasing transparency throughout the government and civil service. The government will also agree to a comprehensive review a series of tax breaks.

The SYRIZA government will also seek to dispel the notion that it intends to begin doling out cash, stressing that it will implement balanced budgets even as it seeks to free itself from the burden of meeting what it sees as the unrealistic Memorandum targets of primary budget surpluses of 4% of GDP.

Tsipras will argue that this would in turn allow his government to invest in the productive restructuring of the economy. The government will also propose a pan-European ‘New Deal’ in addition to the investment program announced by the European Commission head, Jean-Claude Juncker. It will propose an agreement to revise the 2014-2020 European Structural Fund program and will propose that public investments are exempted from the deficit targets established by the Growth and Stability Pact.

The battle over the debt

The issue of the debt will clearly be the elephant in the room. The Greek government will argue that the policies that have been followed over the past four years have failed and along those lines will seek a European level solution, with a debt conference and a write-off of a large part of the debt. It will also press for a moratorium on debt servicing payments and a clause that will link future debt servicing to growth in the Greek economy. The negotiation, Athens insists, ‘will begin from scratch’.

At the same time Athens will insist that it will not negotiate over measures the government plans to take to combat the ‘humanitarian crisis’.

In short SYRIZA will argue that in return for concessions on the debt that will allow the Greek economy to breathe again, the Europeans will obtain a willing partner to reform and tackle corruption in the Greek state.

However it is unlikely that Greece’s lenders would agree to an outright write-off – perhaps instead agreeing to an extension on debt repayment schedules. At the same time they are likely to demand reforms to liberalize the Greek economy, many of which will be anathema to the leftist SYRIZA. Whether these differences are bridgeable will determine much about Greece, and Europe’s future.


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