Greece’s German Allies Aghast as Tsipras Fails to Assure

by Birgit JennenPatrick Donahue

2:36 PM EET

March 27, 2015

(Bloomberg) -- Even Greek Prime Minister Alexis Tsipras’s friends in Germany are getting exasperated with his government after a visit to Berlin fueled skepticism that he can do what’s needed to end the impasse over his country’s finances.

While the atmosphere was good in talks between Tsipras and Chancellor Angela Merkel this week, an improvement in tone may not help resolve a standoff over the reforms required to unlock aid, according to a German government official familiar with the chancellor’s strategy on Greece who asked not to be named because the meeting was private. Members of Merkel’s Social Democratic coalition partners, who have sought to strike a more moderate tone on Greece than her party, were left unconvinced that he can resolve the crisis.

“What’s coming out of Greece is moving completely in the wrong direction,” Joachim Poss, a Social Democratic lawmaker who is the party’s deputy parliamentary spokesman on finance policy, said in an interview. “The situation is really worrying -- we’re stunned watching the developments.”

Tsipras’s difficulty in persuading even more measured German policy makers he’s on the right track risks entrenching a conflict with Greece’s European creditors as his government runs out of money. More than a month after winning an extension of the country’s bailout deal, Greek officials will finally submit plans on how they’ll meet the conditions for releasing aid on Friday, an official from Tsipras’s administration said.

The delay led Thomas Oppermann, the Social Democrat Bundestag floor leader, to join Finance Minister Wolfgang Schaeuble in speculating about a possible Greek exit.

‘Political Disaster’

“A Greek exit from the euro zone would be a political disaster, not only for the euro zone but for the whole idea of Europe,” Oppermann told Deutschlandfunk radio March 24. “Of course we can’t rule that out. It’s first of all down to the Greek government whether it does what is required to stay in the euro zone.”

Inspectors from Greece’s creditors will begin discussing the government’s reform commitments with Tsipras’s representatives either late Friday or on Saturday morning, the Greek official said. The Greeks are aiming to have their plans approved by a euro-area finance ministers meeting on April 1.

Ministers are unlikely to consider the latest proposals before the Easter holiday, an EU official said, requesting anonymity because talks are private.

Greek stocks were little changed at 3:53 p.m. in Athens, while yields on 10-year bonds fell 11 basis points to 10.99 percent.

Social Democrats in Berlin complained that Tsipras’s government appeared to be dragging its feet on the steps necessary, and even rolling back anti-corruption efforts and faltering in its attempts to raise more tax revenue.

‘Shocked’

“At the beginning, our hope was that a new left-wing government would take on the fight against corruption and tax the rich,” Ingrid Arndt-Brauer, the Social Democratic chairwoman of the lower house’s finance committee, said in an interview. “We are shocked that the Greek government is not acting on this and is wasting important time.”

Tsipras held talks with two SPD leaders on Tuesday, Vice Chancellor Sigmar Gabriel and Foreign Minister Frank-Walter Steinmeier. Steinmeier said after the meeting that while bilateral relations between the two countries had “significantly improved,” more needed to be done.

Tsipras’s meetings in Berlin followed efforts to win Social Democratic allies with visits to French President Francois Hollande and Italian Prime Minister Matteo Renzi weeks before he came to see Merkel. Both governing parties in France and Italy instead stepped up pressure on the Greek premier.

While Europe’s Social Democrats are not allied with Tsipras’s Syriza, an acronym for Coalition of the Radical Left, they have shown more sympathy than some members of Merkel’s bloc for Greece’s plight and Tsipras’s push to shift away from budget cuts and focus on economic growth.

Merkel’s Christian Democrats, already increasingly hostile to aiding Greece, urged the Greek leader to present the promised reform list and stop blaming others for his country’s plight.

“This basic understanding needs to develop,” Michael Grosse-Broemer, Merkel’s parliamentary whip, said on Tuesday. “This isn’t insolence, it’s not talking down -- it’s normal.”

To contact the reporters on this story: Birgit Jennen in Berlin at bjennen1@bloomberg.net; Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Ben Sills, Richard Bravo