Greek Prime Minister Alexis Tsipras walks another high wire over the next 24 hours as he tries to come up with financial measures that satisfy both the demands of euro-region creditors and his anti-austerity party.

After talks in Brussels between officials from the 19 euro members concluded late on Feb. 20 with an agreement to extend bailout funds for four months, the government in Athens now has until the end of Monday local time to complete a list of policies in return for the continued funding.

Finance chiefs will then decide whether the proposals go far enough or trigger another round of emergency negotiations this week.

“The stakes are too high for the euro area and mostly for Greece, as the country’s economy and especially banking system may face an imminent collapse,” said Panos Tsakloglou, a professor at Athens University of Economic and Business.

“One way or another they will manage to strike a compromise on the list of measures required for the extension of the program.”

The agreement potentially frees up money to meet some of the pledges made by Tsipras before disgruntled Greeks catapulted his Syriza party into power almost a month ago. The outcome may still prove politically bruising for him after he was forced to ditch plans to take back control of Greece’s beleaguered finances so he could raise wages and pensions.

The new policies remain subject to validation by the International Monetary Fund, the European Central Bank and the European Commission, the institutions collectively known as the troika from which Tsipras vowed to break free.

The 40-year-old premier began the task of selling domestically the provisional deal to extend bailout funds after securing the reprieve from the prospect of national insolvency.

“We won a battle, but not the war,” he said in a nationally televised address on Saturday. “The difficulties, the real difficulties, not only those related to the discussions and the relationship with our partners, are ahead of us.”

While the government has discussed the measures with the institutions, the proposals are Greek and haven’t been put forward by creditors, Finance Minister Yanis Varoufakis said after a cabinet meeting the same day.

There is no disagreement and “we are almost certain that we will get a yes from the institutions,” he said.

The European Commission is currently involved in constructive talks with its Greek partners after Friday’s decisions, a spokeswoman said on Sunday.

The commission and other European Union institutions will make a first assessment before a conference call of euro region finance ministers on Tuesday to discuss the Greek response, she said,
declining to be named in line with policy.

Should the deal be approved, it will be put to national parliaments. Austrian Finance Minister Hans Joerg Schelling said that a new meeting of the so-called Eurogroup will be called “immediately” if the list of measures is seen as insufficient.

The reforms will be “based on the current arrangement,” the Eurogroup said. That will include fighting corruption and public administration and tax-system changes, government spokesman Gabriel Sakellaridis said on Saturday.

Tsipras said the agreement “cancels austerity” and annuls pledges by the previous government to cut wages, pensions and state employees and increase sales taxes.

The breakthrough removed the threat of the ECB pulling the plug on the nation’s banks, a prospect that would have risked Greece crashing out of the euro. Capital controls are now out of the question, according to a euro-area official.

Withdrawals of deposits from Greek banks reached 20 billion euros ($22.8 billion) since December.

By comparison, disbursement of the next bailout tranche would total about 7 billion euros. It will be made once the country’s commitments are implemented, allowing Greece to keep servicing its short- term debt, including IMF loan repayments.

Friday’s agreement permits Greece to lower previously agreed upon targets on a primary budget surplus, the money it has left over before interest payments on debt.

In return, it will refrain from unilateral action that may risk those goals and will abandon plans to use about 11 billion euros in left-over European bank support funds to help restart the Greek economy.

Convincing the rank and file in his Syriza party of its wisdom may prove tricky. Since its first international bailout in 2010, Greece’s economy has shrunk by about a quarter and it’s shouldering the highest unemployment in the euro region.

Tsipras’s election pledges included raising pensions and the minimum wage, halting most state-asset sales and reinstating some government workers.

Syriza lawmakers will approve the list of measures even if they don’t fully meet pre-election promises, George Stathakis, Greece’s minister for economy, shipping, tourism and infrastructure, said in an interview with Sunday’s Kathimerini.

Environment and Energy Minister Panagiotis Lafazanis, though, told Real News in an interview that Syriza’s “red lines won’t be violated, that’s why they’re called red.”

The deal with the euro-area partners doesn’t mean that the government’s red lines “disappear,” Georgios Katrougalos, alternative Administrative Reform minister, said in an interview with Skai TV.

“I probably wouldn’t stay in my position if I think that those red lines aren’t being respected, but the government intends to respect them.”

Bloomberg

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