Greek Prime Minister Rejects Further Austerity or Labor Changes

The New York Times

By NIKI KITSANTONIS

MAY 15, 2015

ATHENS — Greece’s prime minister, Alexis Tsipras, said in a speech on Friday that his government wanted a deal with the country’s creditors but that it would not enforce additional austerity measures, like further pension cuts.

Mr. Tsipras said Greece wanted a “unified agreement” that would restructure its huge debt, a thorny issue not on the agenda of the current talks.

Weeks of difficult negotiations have yielded some common ground, Mr. Tsipras told an audience of entrepreneurs and politicians at a conference in Athens sponsored by The Economist. Convergence on fiscal targets, “marginal changes” to value-added tax rates and an improvement to the tax collection system “make us optimistic that we are very close to an agreement,” he said.

But he said the two sides remained divided on the contentious issues of overhauling the labor sector and the pension system.

“I want to reassure the Greek people that there is no possibility or chance that the Greek government will back down on pension and labor issues,” he said, adding that additional pension cuts “cannot be accepted.”

Greece and its international creditors have been locked in negotiations aimed at releasing billions of euros of loans since February, when the European portion of the country’s 240 billion euro bailout was extended by four months. Greece is short of money because of the deadlock, fueling fears that it will default on its debt, which totals around €320 billion, and possibly exit the eurozone with largely unforeseeable repercussions.

Mr. Tsipras’s leftist-led coalition has balked at changes that it believes will further burden ordinary Greeks. He came to power in January on a pledge to end five years of austerity that has reduced household incomes by a third and pushed unemployment to 25 percent.

The Greek government wants an agreement, Mr. Tsipras said in his speech on Friday, but it must be “honorable and mutually beneficial.”

He set out four conditions for what a “single and unified agreement” would be. Such a deal should include a budget in the black before debt is repaid, no further cuts to salaries and pensions, a restructuring of the debt and “strong public investments.”

“We invite the other side, after five years of nonrealistic targets and constant failures, to give in to reality,” he said, calling for “not just an agreement but a solution.”

Greece’s creditors appear reluctant to make concessions that could encourage other countries to seek similar relief. European and International Monetary Fund officials have insisted in recent days that Greece must complete economic reforms to unlock a €7.2 billion bailout installment.

The Greek prime minister is also under pressure at home, with disagreements rising within the ranks of the government and Mr. Tsipras’s party, Syriza, about the extent of concessions Greece should make. After what was said to be a stormy meeting of Syriza officials late Thursday, the leftist party’s political secretariat issued a statement emphasizing the lines that the party would not cross and calling on the Greek people to “join the battle.”

The political tensions are rising against the backdrop of dwindling finances. Authorities met midmonth wage and pension commitments on Friday, paying out some €500 million on schedule. But Greece has struggled to meet its repayment schedule in recent weeks, and may not be able make coming payments without the release of further loans.