Greece walks fine line in new offer to EU creditors

In an attempt to secure loans for its nearly bankrupt economy, Greece's leftist government delivered new proposals to its creditors this week that — much to the dismay of some fellow Greek lawmakers — include concessions that conflict with the ruling party's election pledges.

Greece offered Monday a series of measures, including multiple tax increases, to persuade its eurozone partners to release bailout funds and keep the country from defaulting on its debts as soon as next week. But a spokesman for the government of Alexis Tsipras acknowledged Tuesday that the suggested reforms include "harsh" measures the government would not have proposed if it felt it had a choice.

"There is full comprehension that there are measures in the proposal that are harsh, and they are measures that under different circumstances, if it were up to us, there was no way we would have taken," spokesman Gabriel Sakellaridis told Greek television station Antenna.

Tsipras' Syriza party won January elections on promises of repealing the economic austerity measures that successive governments imposed in return for bailouts worth 240 billion euros since May 2010.

But with creditors withholding the final 7.2 billion euros in rescue loans and state coffers running dry, Tsipras has been forced to backtrack on many pledges in the hope of securing a deal that would prevent a default on Greece's debts and a messy exit from Europe's joint currency. Greece faces a 1.6 billion euro repayment to the International Monetary Fund on June 30 — an amount it cannot afford.

Sakellaridis said the proposed measures seek to increase taxes on those with higher incomes rather than on low-income families, salaried employees and pensioners. In its new proposal, Greece also pledged to lift the retirement age gradually to 67 from 65 for men and curb early retirement.

But Tsipras faces skepticism over his new proposals. Reluctance comes not only from European finance ministers — especially top lender Germany, which leads the faction that's hawkish on Greek structural reform — but also from members of his own government.

A few outspoken Syriza lawmakers voiced outrage over Tsipras' offer to raise a range of taxes as well as pension and health care contributions, which threaten to increase hardship on Greeks reeling from previous rounds of austerity.

"I believe that this program as we see it ... is difficult to pass by us," Syriza's Alexis Mitropoulos, the deputy parliament speaker, told Greek Mega TV. "The prime minister first has to inform our people on why we failed in the negotiation and ended up with this result. I believe [the measures] are not in line with the principles of the left. This social carnage ... they cannot accept it."

"The government has fallen into a trap. I don't know to what extent this can be implemented," said Pavlos Haikalis, a deputy with Syriza's junior coalition partner, the Independent Greeks.

Still, with Greece perilously close to bankruptcy, it is unclear whether such lawmakers, for all their bluster, would pull the rug from under Tsipras if he is able to secure a deal.

"I believe the deal will pass parliament and will reconfirm the government's majority," Dimitris Papadimoulis, a Syriza minister in the European Parliament, told Reuters. "I do not believe that top Syriza lawmakers will want to be responsible for bringing down a five-month-old government and a prime minister who enjoys popular support of about 70 percent."

Polls suggest that a majority of Greeks want to stay in the European monetary union — evidenced by large pro-EU demonstrations in Athens on Monday.

But large rallies in support of the government’s resistance to austerity cuts have also been common on the streets of Athens in recent weeks.

Whether European creditors are amenable to a deal built on the framework of Tsipras’ new proposals remains an open question. Eurozone finance ministers are expected to meet to approve a reform package Wednesday evening and put it to leaders for final endorsement on Thursday morning.

The lenders, which include eurozone member states, the European Central Bank and the International Monetary Fund have demanded reforms to put Greece's public finances on a more sustainable footing and keep the country from slipping back into the habits of overspending that many say contributed to its financial crisis.

After a series of meetings in Brussels on Monday, many Europeans said the new proposals offered a good basis to break a four-month deadlock and reach an agreement this week.

Ministers needed to make "one last push" to finalize the deal, French Finance Minister Michel Sapin said Tuesday. He said of Greece's new proposals, "These are tangible elements we can work with in an efficient way to reach an agreement." 

Al Jazeera and wire services