An elderly couple makes their way along a main commercial street in the early morning in central Athens. Right: Employees clean the sidewalk next to an entrance to a shop on a main commercial street in central Athens.
Greek prime minister Alexis Tsipras, struggling to contain a revolt in his left-wing Syriza party, said yesterday that his government would not implement reform measures beyond those agreed with lenders at a euro zone summit this month.
Tsipras faces a tough Syriza central committee session today with many activists angered by his acceptance of bailout terms more stringent than those voters rejected in a July 5 referendum.
In a clear warning to party rebels, Tsipras said he could be forced to call early elections if he no longer had a parliamentary majority, and suggested an emergency party congress could be held in early September.
At the same time, Tsipras is under pressure from Greece’s creditors to go beyond the two packages of so-called prior actions passed by parliament and include unpopular steps to curb early retirement and tax breaks for farmers, EU sources say.
“I know well the framework of the deal we signed at the euro zone summit on July 12,” he told Sto Kokkino radio. “We will implement these commitments, irrespective of whether we agree with it or not. Nothing beyond that.”
With Greece close to the financial abyss last month, the government closed the country’s banks for three weeks under a capital controls regime, and Tsipras was later forced to make the major concessions on reform and austerity in order to open negotiations on a third bailout worth up to 86 billion euros.
A European Commission spokeswoman declined to say what additional measures were expected of Athens before the conclusion of the new bailout, although she said earlier this week that more reforms were due before the first aid is disbursed.
Tsipras said Greece’s primary budget balance before debt service would break even at best or show a deficit this year, depending on a financial situation that has deteriorated sharply since the imposition of capital controls on June 28.
The terms for launching the bailout talks that began this week did not include specific fiscal targets but Athens had previously been expected to achieve a primary surplus equivalent to 1 percent of annual Greek economic output this year and 2 percent in 2016.
Germany’s Der Spiegel magazine reported that the creditors were willing to allow a gentler fiscal path taking account of Greece’s return to recession, provided Athens pursued economic and administrative reforms more energetically.
With the banking squeeze easing, the European Central Bank kept its cap on emergency funding for Greek banks unchanged yesterday after Athens did not request another increase, a source familiar with the decision said.
The stock market remained closed because authorities are still waiting for a ministerial decree needed to resume trading after a nearly five-week shutdown, a senior official at the Greek securities regulator said.
The Athens Stock Exchange has been shut since June 29 after the government closed the banks and imposed the capital controls to stop a run on deposits by savers and companies.
European Commission spokeswoman Nina Andreeva, keen not to add to Tsipras’s domestic problems, praised the conduct of the bailout talks so far, brushing aside talk of issues over security and access.
“We are satisfied with the smooth and constructive cooperation with the Greek authorities and that should now allow us to progress as swiftly as possible,” she told reporters.
Intensive preparatory talks with officials from the Commission, the ECB, the International Monetary Fund and the euro zone’s rescue fund, the European Stability Mechanism, began on Monday. The creditors’ Athens mission chiefs are due to start negotiations with Greek ministers later this week.
Andreeva played down critical comments by Tsipras on the bailout made to his domestic audience, saying the commitments made at the summit were being carried out as foreseen.
Tsipras faces an uncertain vote in the 200 member Syriza central committee with sacked former energy minister Panagiotis Lafazanis leading a leftist faction that rejected the July 13 deal and is demanding a tougher line with the creditors.
Compounding his problems, former finance minister Yanis Varoufakis continues to pour abuse on the agreement in daily media interviews and articles, accusing the creditors of trampling on Greek sovereignty and justifying his own secret planning while in office to set up an alternative currency.
“It was a financial war,” Varoufakis told Germany’s Stern magazine in an interview released on Wednesday. “Today you don’t need tanks to beat someone. You’ve got your banks.”
European Economics Commissioner Pierre Moscovici laughed off Varoufakis’s disclosures about a “Plan B” he had developed with a covert five-member unit that would have involved hacking into citizens’ tax codes to create a parallel payments system.
“This is perhaps something for domestic politics. It’s a career plan, a Plan C for Mr Varoufakis,” Moscovici told France’s Europe 1 radio. “Everything done in a dilettante way is an absurdity.”
A prosecutor has launched an investigation into whether any laws were violated after former finance minister Yanis Varoufakis revealed plans to hack into tax codes and create a parallel payment system, court officials said yesterday.
The probe will not focus on Varoufakis himself, since Greek courts can only investigate those who are not ministers or lawmakers, who enjoy parliamentary immunity from prosecution.
Instead it will look into media reports on the plan to see whether any crimes like violation of personal data protection and breach of duty were committed. A group of lawywers filed a lawsuit this week.
Varoufakis this week confirmed he assembled a small team to prepare a parallel payment system as part of a so-called “Plan B” in case Greece was forced to leave the euro zone, prompting shock and outrage from opposition lawmakers who have demanded an inquiry into the matter..
Two separate lawsuits filed against Varoufakis over the case have been transferred to parliament who will decide whether he needs to be investigated. As things stand, he cannot be prosecuted because the immunity rule covers any crime that might have been committed during his term at the finance ministry. Varoufakis, who has denied any wrongdoing, said that this was an effort to hurt the government.
“Their aim is to register the January-July period as a “great” mistake or even “better” to criminalise the five-month tough negotiations by the government of the Left,” said a statement issued by his office.
One of the suits was filed by the mayor of a Greek town who attacked Varoufakis’ personal style, accusing him of “exceptionally unfriendly” behaviour and exposing Greece to hostility from euro zone partners.
The government served notice yesterday that prime minister Alexis Tsipras’s promised crackdown on tax evasion is now under way, a week after sweeping increases in value-added tax were imposed.
“We will start in the expensive destinations, the luxurious hotels and we will go even to the smallest taverna,” deputy finance minister Trifon Alexiadis told reporters, outlining the government’s summer plans for cracking down on evasion.
Spot checks by the ministry’s financial crimes squad over the past weekend turned up tax violations by almost one in four businesses, he said.
Budget cuts have left the debt-stricken country’s financial crimes unit short-staffed, but extra inspectors will be drafted in from other departments to help with the audit push, Alexiadis said. Offices that handle public enquiries will also be closed periodically so staff can concentrate on anti-evasion work.
In a recent report on Greece, the International Monetary Fund said that while debt collection was improving, tax evasion remained rampant among the rich and the self-employed.