reflections

Greece's EU Deal Causes Domestic Political Rifts

5 MINS READFeb 24, 2015 | 22:54 GMT
(Stratfor)
It can be difficult to separate the important from unimportant on any given day. Reflections mean to do exactly that — by thinking about what happened today, we can consider what might happen tomorrow.

The Greek government passed a key test on Tuesday when the eurozone's finance ministers accepted a series of economic reform proposals that Athens made a day earlier. The ministers' approval opens the door for a four-month extension of Greece's bailout program and temporarily reduces the chance of the Mediterranean nation leaving the eurozone. However, not everyone is pleased with the agreement. In fact, many members of Greece's ruling Syriza party see Athens' proposals as capitulation. Though Greece's relations with its neighbors remain tense, in the coming days the main threat for the Greek government will come from within.

After years of painful spending cuts and tax hikes for the Greeks, Syriza leader Alexis Tsipras became prime minister in January on a platform based on debt relief and putting an end to austerity measures and supervision of the Greek economy by the European Union and the International Monetary Fund. His government began backtracking in recent weeks as it requested an extension of Greece's bailout program and accepted continued oversight from its lenders. Then, in a letter sent to the Eurogroup Feb. 23, Athens also promised not to stop the ongoing process of privatizations and to reform the country's pension system and collective bargaining mechanisms — all of which will create significant dissent within the government.

So far, the Greek population is relieved that Athens did not have to introduce capital controls or leave the euro. However, the Greek government will have to ratify the deal before Feb. 28, which means that Tsipras will spend the coming hours doing damage control and reassuring the more radical members of his coalition. The Greek prime minister held several meetings Tuesday with Syriza members to try to ease tensions within the party.

Greece is seeing Syriza's internal divisions re-emerging. These are the same ideological frictions that troubled the party before the election. In July 2013, Syriza, which is actually a coalition of left-wing groups, held a congress to discuss the party's organization and political orientation. Tsipras was confirmed as party leader with over 70 percent of the vote. But another faction, known as the Left Platform, secured 30 percent of the seats on Syriza's central committee. The Left Platform includes some of Syriza's most radical left-wing politicians. The faction opposes the privatization of companies in strategic sectors and is open to the idea of leaving the euro.

Though softer rhetoric enabled Syriza to attract moderate voters, the disputes within the party were never really resolved. After the election, Tsipras appointed Left Platform leader Panagiotis Lafazanis as minister of productive reconstruction, environment and energy to appease the dissenting faction. During a Tuesday Cabinet meeting to discuss Greece's proposals to the Eurogroup, Lafazanis allegedly criticized Athens' proposal not to reverse the process of privatization of state-owned companies and requested more details on what exactly the government plans to do in the coming weeks.

Syriza and its minor coalition partner, the nationalist Independent Greeks party, control 162 of the 300 seats in the Greek parliament. Should rebel members of Syriza or the Independent Greeks vote against the government, Tsipras' control of the parliament would be seriously compromised. The Left Platform holds some 30 seats in the Greek parliament, which means that their support is crucial for Tsipras to have a working majority.

In the case of a rebellion against the government, Tsipras would have to either abandon some of his promises to the European Union and the IMF or look for other partners to pass the controversial measures. The centrist To Potami party, which has 17 seats, seems like the most suitable option, but its support will come with conditions (most notably, not defaulting on Greece's debt and keeping good ties with the European Union). Syriza is unlikely to request support from mainstream parties, including the center-right New Democracy and center-left Panhellenic Socialist Movement, and cooperation with the far-right Golden Dawn seems virtually impossible.

Greece is expected to present a more comprehensive list of reforms to the European Union and the IMF by late April. Approval from these institutions will be key for Greece to receive the final tranche of its bailout program — roughly 7 billion euros ($7.9 billion) that Athens needs badly. After approving Greece's general list of proposals on Tuesday, the Eurogroup issued a statement calling on Greek authorities to "further develop and broaden the list of reform measures" by April. The European Central Bank and the IMF made similar statements asking Athens to make concrete proposals and commitments.

If the announcement of an agreement with the European Union and the IMF was controversial, its enforcement will be even more so. Even if Tsipras' coalition overcomes its disputes, parliament will shortly have to start passing legislation linked to Greece's promises to the Eurogroup. Tsipras will be under pressure not to introduce some of the policies that his government has just proposed to the European Union, which could seriously jeopardize Greece's bailout extension and its membership in the eurozone.

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