Greeks Need Their Leader to Be Tough

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Does Alexis Tsipras, the prime minister of Greece, have the guts to break with his far-left faction? The country’s fate hangs on the answer.
Greece’s immediate prospects are dicey. It will default in mid-April unless its eurozone creditors lend it more money or it scrapes together cash from other sources.
The central short-term issue is whether the reform proposals that Athens plans to submit to creditors on Monday will be enough to unlock some credit.
The government sent negotiators to Brussels over the weekend to hash out the package after another week during which the technical teams on the ground in Athens achieved little. Meanwhile, Yanis Varoufakis, the finance minister, mused publicly about the possibility of a “rupture.” The implication was that Athens would default if it were not able to secure an acceptable deal with its creditors.
Such a rupture could happen as early as April 9, when Greece has to repay money it owes the International Monetary Fund. If Athens defaults then, capital controls would presumably be imposed at the same time, coinciding with the four-day Greek Easter holiday, which starts on April 10.
Mr. Tsipras might toy with the idea of calling a snap election to gain renewed support from the Greek people for such a tough line. Given that the opposition is in disarray and his own popularity is riding high, he might hope to win such a vote.
But the government’s approval has already fallen from 83 percent in February to 60 percent last week, according to a poll for Alpha TV. Its popularity would probably plunge further since cash machines would run out of money within days and key commodities such as petrol might have to be rationed after capital controls were imposed.
If Mr. Tsipras were rational, he would want to avoid this scenario. The problem is that he would then have to make a deal with his creditors, which would also be painful. That would most likely require him not just to make promises but to start implementing them before any more cash was released.
This is where the prime minister will run into a confrontation with his far-left faction, which accounts for 30 to 40 of his Syriza party’s 149 members in Parliament. They will accuse him of selling out and may well vote against the laws needed to implement a deal with the country’s creditors.
Mr. Tsipras would probably still be able to pass legislation with the help of some opposition parties.
But such an arrangement could not last for long. In that scenario, the most sensible move would be to call a second election.
The prime minister could then kick out his far-left faction and replace its members of Parliament with moderates. Mr. Tsipras could win the election with an enhanced majority.
The snag is that the prime minister would have to summon the courage to break with his political comrades. It is unclear whether he is tough enough to do this.

Meanwhile, there is a risk that the government will charge off in the wrong direction, even if it secures a quick fix with its creditors in the next week or so. It has promised to deliver a 1.5 percent fiscal surplus before interest payments this year, according to Reuters. But this seems impossible without further austerity measures, which would crush the economy.
Mr. Tsipras may think he will be a hero at home if he secures an agreement for a 1.5 percent surplus. After all, the current agreement calls for a 3 percent surplus.
But since that deal was made, the economy’s prospects have deteriorated. Political uncertainty has shattered confidence and lack of liquidity is choking off business. The European Central Bank has kept Greek banks on a tight leash, while the government itself has grabbed every little bit of cash it can get its hands on to keep from going bust.
Athens is still predicting 1.4 percent growth this year. But it will be lucky to grow at all.
Things will settle down only if the government reaches a new long-term deal with its creditors, for which the current discussions are just the preliminary skirmishing.
In other words, Mr. Tsipras is setting himself up for failure by promising a 1.5 percent surplus. He needs to find a way off this hook.
The problem is that Mr. Tsipras has not convinced his creditors that he is serious about reform or that his team is remotely on top of the detail. He needs a game-changer. This should, indeed, be a rupture — but with his left faction, not his creditors.
Hugo Dixon is editor at large of Reuters News.

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