Debt restructuring crucial for Tsipras’ survival

Debt restructuring crucial for Tsipras’ survival

“Just before the dawn is the deepest darkness,” said the leader of the Greek leftist party of Syriza, Alexis Tsipras, in his final speech on the closing day of his party’s second conference on Oct. 16. 

The 42-year-old leader of a small protest movement that rapidly grew during Greece’s deepest economic crisis to become a mainstream party and win the last two elections was visibly frustrated. Speaking to a packed audience of party members and visitors – including a co-leader of Turkey’s Peoples’ Democratic Party – he warned that the next three months would be “the toughest” as the “war is raging inside and outside the country.”

Greece is at the center of a difficult point, he said. “They all know, inside and outside, that a new dawn is about to rise for the Greek economy and Greek society,” he said, noting that this was the result of the policies of his government. “We are all deeply aware of the situation. We do not fly in the sky because we know the difficulties and restrictions. We took difficult decisions consciously and we have one choice now: to work hard and decisively with a plan to get our country out of the trusteeship and the vicious circle of the debt crisis, recession and austerity,” he announced from the podium of an indoor sports hall in the south of Athens.

Three months before its second anniversary, the leftist Syriza-Anel government has already amassed enough political enemies to feel uneasy. Society is suffering under a new set of austerity measures. Greeks whose income has been drastically reduced by heavy taxation and reduced salaries may search for political alternatives. The opposition is getting ready for a possible early general election. For the opposition, Tsipras gets the biggest share of the blame: he is seen as a leader who backtracked on his promises, let society down, made compromises with Brussels, put the country under a new stricter – but ineffective so far – bailout program. From a young promising clean politician, he has now become the target for dishonesty and populism. 

The latest figures do not help. After seven years in recession and austerity policies and with massive government debt, Greek national product has shrunk by 30 percent and unemployment is still the highest in Europe. Tsipras’ recent prediction that in 2017, the Greek economy would grow by 2.7 percent, has been met with skepticism given the reservations of foreign capital about investing in Greece. 

Syriza’s party conference was crucial. Tsipras appealed and apparently secured the unity of the party. “We should put our emphasis on the party to win battles,” he said, warning that “the war is ahead of us. To win, we need a strong party linked with the society, its struggles and expectations.” The trauma of last year’s split of the party is over. The party is united. 

But it was also to Brussels, Berlin and the United States that Tsipras wanted to send his message. And this is a message of impatience, frustration and even anger at the country’s creditors (EU, ECB, IMF) who still refuse a much-needed restructuring of Greece’s debt currently running at almost 177 percent of GDP, the highest in Europe. A discussion on the restructuring of Greece’s debt has been agreed among the creditors but keeps getting postponed by Berlin and Brussels.

“We continue to apply a tough agreement, and we expect the same from the creditors. We are not going to accept any deviations or delays. We have strong alliances… more and more parties agree that the Greek debt should be regulated not only as a moral issue toward Greece but in the interest of Europe,” he said. 
Greek commentators wonder how Greece can impose its urgent schedule at a time when Brussels is battling with its internal centrifugal tensions and German Chancellor Angela Merkel expects a tough political challenge in the November elections.

The answer could be, according to Greek media, that Greece may call upon the American government to intervene with Greece’s European partners on the debt issue. It is a matter of urgency not only for the survival of the Greek economy but for Tsipras’ government.