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 Raising the stakes in its acrimonious negotiations with
international creditors, Greece has decided to postpone payment of
the 300 million euro ($338 million) loan -- a highly unusual step,
but one that does not yet signal a formal default.
The surprise decision was taken on Thursday, just hours after Prime
Minister Alexis Tsipras was presented with a tough compromise deal
from lenders that crossed many of his 'red lines', including tax
hikes, privatisations and pension reform.
The offer is aimed at staving off imminent bankruptcy, but it has
triggered fury in Greece's ruling Syriza party and early elections
would be a way to seek public legitimacy for the difficult decisions
needed to secure more cash.
Greece's bailout expires at the end of June and if no
cash-for-reforms deal is done by then, default would seem certain,
shunting the euro zone into uncharted waters and opening the way for
Greece to exit the single currency.
The Athens stock market fell 3.2 percent in early trade on Friday,
while yields on Greek and lower-rated euro zone bonds headed higher
in a sign of growing investor unease.
Tsipras, elected in January on a promise to end years of grinding
austerity, is due to brief parliament at 1500 GMT, with his party
showing little willingness to back down.
"The lenders want to impose hard measures. If they do not back down
from this package of blackmail, the government ... will have to seek
alternative solutions, elections," Deputy Social Security Minister
Dimitris Stratoulis, a hardliner in the government, told Antenna TV.
Greek Economy Minister George Stathakis said the latest deal, drawn
up earlier this week by top level officials, including German
Chancellor Angela Merkel, was unacceptable, but stressed that his
country did not want to leave the euro zone.
"Our government has a mandate to remain in the euro and get a better
deal to ... try to change the terms of the agreement that we have
with European partners," he told BBC radio. "Greece has to remain
within the euro."
An opinion poll published on Friday on the website Newsit showed
that three out of four Greeks wanted to stay in the 19-nation euro
zone, while almost one in two was in favour of the government
reaching a compromise deal.
Some 37 percent of people questioned in the Alco survey supported
early elections to resolve the standoff.
"It is more likely that there will be elections than not," Costas
Panagopoulos, head of ALCO pollster, told Greek radio.
NEGOTIATING TACTIC
Tsipras had indicated late Wednesday that Athens would hand back the
IMF loan on Friday, but less than 24 hours later, his government
changed direction, deciding instead to bundle together some 1.6
billion euros it owes the Washington-based lender in June into a
single payment at the end of the month.
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It was the first time in five years of crisis that Greece has
postponed a repayment on its 240 billion euro bailouts from euro
zone governments, the European Central Bank and the International
Monetary Fund.
The IMF said the manoeuvre was unorthodox, but permissible.
Stratoulis, close to the far-left of the Syriza party, made clear
the decision was a negotiating tactic.
"The government's move is a message that it wants to wait and see
how far they (lenders) will take it, if they will back off from this
unreasonable, inhumane, colonialist package they are proposing," he
said.
French Finance Minister Michel Sapin said Paris wanted to avoid a
showdown and suggested that compromise was possible.
"Things are on the table, deals are possible, dialogue is
necessary," he told reporters in Paris.
An EU source said Tsipras could return to Brussels for further talks
late on Friday night or Saturday, possibly along with top IMF and
ECB officials
Time is running out to clinch a deal and get desperately needed
further disbursements approved by national parliaments, some of
which have appeared highly reluctant to offer Greece much budget
slack, before the bailout programme expires.
With Europe's big powers, and the United States, concerned about the
unpredictable outcome as Greek reserves shrink toward zero, sources
said the creditors had showed some flexibility this week by lowering
the budget surplus that Athens will be required to run before debt
service payments.
Sources familiar with the proposal said they now sought a primary
surplus of 1 percent of gross domestic product this year and 2
percent next year. Greece has offered 0.8 percent this year and 1.5
percent in 2016. However, since the Greek economy has fallen back
into recession, lowering tax revenues, the lower target will still
require painful retrenchment.
(Reporting by George Georgiopoulos, Lefteris Papadimas and Deepa
Babington in Athens, Kylie MacLellan in London and Leigh Thomas in
Paris; Writing by Crispian Balmer; Editing by Giles Elgood)
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