Wednesday

22nd Sep 2021

EU commission seeks 'unity', after southern states clash

The European Commission is being forced into a mediation role to try and keep the lid on a brewing row between its southern member states, sparked by their respective fears about discontented voters.

Spain and Portugal complained to the European Commission over the weekend following comments by leftist Greek leader Alexis Tsipras that Madrid and Lisbon were conspiring against Athens.

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Tsipras accused the two governments of coming down hard against Greece's recent attempts to get softer terms for its bailout because they were afraid of radical left parties in their own countries being inspired by any concessions that Tsipras might win.

Spanish centre-right PM Mariano Rajoy hit back by saying: "We are not responsible for the frustration created by the radical Greek left, which promised the Greek people things it knew it couldn't hold to."

In Portugal the reaction was also strong. A spokesperson for the governing centre-right party called Tsipras' comments "totally absurd" and "false".

Both countries are facing a general election this year, and both countries face social discontent after years of low growth and high unemployment.

Rajoy, in particular, fears that Spain's political landscape is on course for the same fundamental change as Greece.

Spain's equivalent to Tsipras' party is Podemos, which came out of nowhere in early 2014, and is now topping the polls.

Building bridges

The European Commission on Monday (2 March) said it was "mediating" between the three countries to "ensure there is unity".

It tried to downplay the unusual situation by refusing to call Spain and Portugal's grumbles - made at "several levels" - over the weekend a "formal" complaint.

"We are building bridges and bringing the actors together," said a spokesperson.

But the comments by Tsipras also reflect the difficulty the Greek leader is having in selling the bailout extension, including its tough conditions, to the hard left in his party.

Tsipras' entire election campaign was based on scrapping austerity, not getting the bailout extended and getting debt relief.

After down-to-the-wire negotiations with eurozone partners, he has been unable to deliver on the headline promises, which is already causing discontent in his fractured Syriza party. Last week saw the first anti-government protests in Greece since the Tsipras coalition came to power.

Greek finance minister Yanis Varoufakis recently said the deal on extending the bailout left enough "constructive ambiguity" for everyone to win.

The main actors in the debate - Greece and Germany - have been busy telling their domestic audiences what they think the deal means.

In Athens' case that a debt haircut is not off the table; in Germany's case that Greece will not get a "cent" until reforms are carried out.

But while the German parliament voted (overwhelmingly) in favour of the four-month extension, the Greek parliament will not be voting on last week's agreement.

Meanwhile, the EU commission, which took a notably softer line than the eurogroup of finance ministers in the frenetic bailout-extension negotiations, said that the focus should not be on "words" but on Greece's "delivery of reforms".

Eurogroup chief Jeroen Dijsselbloem, in an interview with the Financial Times, highlighted the need to move quickly.

"My message to the Greek government is: try to start the programme even before the whole renegotiation is finished."

This, he said, could lead to a tranche of the €7.2bn bailout money that is left being paid as early as this month. The offer comes amid fears that Greece is going to run out of cash within the next couple of weeks.

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Greece has indicated it will shortly ask for further assistance, in a sign the bailout extension agreed last week is just the beginning of a longer battle between Athens and its creditors.

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