The Greeks annoy euro-zone creditors by not offering enough reforms

The Economist

A GLANCE at the crowds climbing the Acropolis suggests a normal Athenian summer, despite ominous noises coming from Brussels. Alexis Tsipras, the prime minister, still claims he can cut a deal with Greece’s creditors this month to unlock much-needed bail-out money while avoiding more austerity that could create another deep recession. Yet his optimism is not shared by many. Even supporters of Mr Tsipras’s radical-left Syriza party know that reforms to pensions and labour markets, which he has called “red lines”, may be needed to remain in the euro (a recent poll finds 79% of Greeks in favour of staying). “We’ll have to make concessions in the end, but at least Alexis is putting up a fight,” says Vassilis Stangos, a retired builder.

The bail-out monitors—the European Commission, the IMF and the European Central Bank (ECB)—are frustrated by Greece’s repeated failure to produce credible plans for reforms. Meanwhile, Mr Tsipras calls repeatedly for a “political” solution. “Roughly translated, it means Athens wants cash with as few conditions as possible,” says one weary Eurocrat (see Charlemagne). This week the commission rejected the latest Greek ideas, which included an extra €500m ($570m) from value-added tax but no plan for raising another €500m for pension cuts.

It did not help when Athens reneged on a repayment of €300m to the IMF on June 5th. Its new plan is to bundle up four instalments that are due in June into a single payment of €1.5 billion at the end of the month, taking advantage of a loophole used by Zambia in the 1980s. The creditors’ mood soured again when Mr Tsipras called their latest reform ideas “absurd”. Jean-Claude Juncker, the commission’s president and previously Greece’s best friend, was annoyed when Mr Tsipras dismissed the list as “Juncker’s proposals”.

Mr Tsipras met his French and German counterparts at an EU-Latin American summit in Brussels on June 11th; the three agreed to “intensify” the talks. But the next move is up to the Greeks. After almost four months of snail-paced talks, it looks as if the creditors may now call Greece’s bluff. Yet Syriza has already furiously rejected their demands. The party is even incensed by Mr Tsipras’s own modest plans. Before heading to Brussels he appealed to party bosses to back a deal, insisting he would not call an early election. Yet 22 Syriza MPs are rebelling, which could be enough to bring the government down.More deadlines loom. Greece’s bail-out expires on June 30th; there is talk of extending it to next March, and disbursing some €10 billion left from an earlier bank-recapitalisation fund to ensure that Athens can make repayments for the rest of 2015. But that will require fence-mending with the commission and the goodwill of Germany and other countries whose parliaments would have to approve an extension. Greece must repay €6.5 billion to the ECB in July and August. Bank deposits are shrinking as Greeks fret over the uncomfortable prospect of capital controls. The government is running out of cash to pay wages and pensions, let alone the IMF. Without new help, it will surely default. Mr Tsipras urgently needs to quell opposition in his party and come up with a more convincing set of reforms.