Greek bailout talks to shift gear

ATHENS, July 31 Greece’s ruling Syriza party on Thursday backed a call from Prime Minister Alexis Tsipras for an emergency party congress, as he sought to assert authority following a revolt by hardliners on his handling of bailout talks. European governments have resisted the idea as they negotiate with Athens on further bailout funds.

According to a report in Thursday’s Financial Times, an internal document showed the International Monetary Fund board had been told that Greece’s levels of debt and past record of slow or non-existent reform disqualify it for a third.

Greek Finance Minister Euclid Tsakalotos asked the IMF for a new loan in a letter dated July 23 addressed to fund Managing Director Christine Lagarde.

At a meeting of Syriza’s 200-member central committee held in an old cinema hall with a giant red backdrop, Tsipras defended his decision to accept harsh bailout terms as the best deal anyone could win for Greece.

The new bailout deal is supposed to be concluded by late August.

In responding to his challengers, the PM underlined that the party’s decisions must be respected and that the current dualism must end, so that the government does not rely on the votes of other parties.

Far-left dissenters argue Syriza has abandoned its principles over the past six months under the country’s popular prime minister.

The reversal left him at odds with own rank and file in a showdown that could put Europe’s most indebted state on course for snap elections.

He threw down the gauntlet before his critics by proposing an immediate membership ballot on the bailout negotiation, but said his preference was for Syriza to hold an emergency congress in September to deliberate strategy.

Fully named the Coalition of the Radical Left, Syriza was formed as an alliance that eventually included about a dozen left-wing and anti-establishment groups who voted to become a unified party in 2013.

Tsipras effectively lost his majority in parliament in a vote three weeks ago, when almost one-fourth of Syriza’s lawmakers refused to back new austerity measures.

“After abandoning earlier vows of unity, both sides appear to be preparing for a showdown today that could even split the party”, Paris Mantzavras and George Grigoriou, analysts at Athens-based Pantelakis Securities SA, wrote in a note to clients Thursday.

Panagiotis Lafazanis, recently fired as energy minister in a reshuffle, called for Greece to return to a national currency.

On Wednesday, the fund’s managing director Christine Lagarde said “for any programme to fly, a significant debt restructuring should take place”, as otherwise the IMF’s projections have inked in Greek debt rising to 200% of GDP before the end of 2017. “After this we can deal with party issues”.