“…the platform on which Syriza won the recent general election has been significantly reconstructed.”

What now for “the Syriza experiment“?  The Irish Times reports that the Eurogroup of finance ministers have deemed the Greek government’s list of proposed reforms to be “sufficiently comprehensive” for a four-month extension of the Greek bailout programme which was due to expire on Saturday.

In an official statement released after today’s conference call between euro zone finance ministers, the euro group said that the proposal was “sufficiently comprehensive” to be a valid starting point for a successful conclusion of the review. However, the statement noted that the reform measures “will be further specified and then agreed with the institutions at the latest by the end of April.”

The decision by euro zone finance ministers to back the proposals at this stage means that the proposal will now go to the national parliaments of the five euro zone countries which need parliamentary approval, a process that is expected to be completed by the end of the week.

The decision to back the proposal essentially paves the way for a four-month temporary programme for Greece during which time the details of the bailout programme will be negotiated and a possible new programme will be devised.

The Guardian live-blog notes

Mario Draghi, the president of the European Central Bank, has given his approval to Greece’s four-month bailout extension, but also flagged up concerns in a letter to eurogroup chief Jeroen Dijsselbloem.

Draghi isn’t completely happy with the lack of detail in Greek reform plan. And the ECB (one of Greece’s three creditors) wants convincing that any new economic reforms are at least as good as the ones in the existing bailout agreement.

That point echoes the concerns of Christine Lagarde of the International Monetary Fund.

But there may be other items of concern for the new Greek government. From BBC economics editor Robert Peston

In the short course of the latest Greek financial crisis, Syriza appears to have transformed itself from what in the UK would be seen as traditional leftists into Blairites.

In the reforms proposed by the Greek finance minister Yanis Varoufakis to secure a four-month extension of its life-or-death bailout, vanished are the party’s seeming implacable hostility to privatisation, determination to re-hire sacked public-sector workers, and desire for rapid rises in minimum wages.

Or to put it another way, the platform on which Syriza won the recent general election has been significantly reconstructed.

In its place are what we might see as “New Syriza” measures: commitments to improve the efficiency of the public sector and eliminate waste, to promote competition with a strengthened competition commission, to reform labour markets, to streamline pension schemes, not to reverse privatisations and take a pragmatic approach to future sales of government assets.

What happened to the government’s socialism? Well it is in a postscript to the reforms headed “humanitarian crisis” – in which it promises “targeted non-pecuniary measures”, such as food stamps, to tackle poverty. But even here it pledges “no negative fiscal effect”.

The Guardian correspondent in Greece, Helena Smith, adds, “Damage limitation exercise underway in Greece

The government has now distributed a six-page “non-paper”, outlining the points in the “Thessaloniki programme” [Tsipras’s anti-austerity manifesto] which are included in the list of reforms. That’s aimed at the growing number of critics within his own party.

Prime minister Alexis Tsipras outlined his radical left Syriza party’s economic policies in Thessaloniki, Greece’s northern capital, last September – pledging to enact them when he assumed office.

And also from the Guardian live-blog

Reports are filtering through that the atmosphere at the Greek government’s cabinet session this morning was very heavy, with enraged ministers openly objecting to the aid extension agreement signed in Brussels last week.

From Athens, Helena Smith reports:

The energy minister Panagiotis Lafazanis, who heads Syriza’s militant Left Faction, emerged from the meeting “seeing red” according to reporters who were there.

Syriza’s parlimentary group will now hold an emergency meeting at 8pm (6pm GMT) tonight.

As someone once said,

In the Berlaymont building in Brussels, home of the European Commission, officials point to a maxim set out years ago by Luxembourg’s long-serving prime minister, Jean-Claude Juncker: “We all know what to do, but we don’t know how to get re-elected once we have done it.”

[So Standard & Poor were right? – Ed]  Possibly…

Adds  More on that reconstruction here.

And Further detail on the state of play

The Eurogroup said in a statement: “We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close co-ordination with the institutions.”

The European Commission and the European Central Bank (ECB) both stated that the Greek proposals were a “valid starting point”.

The agreement had “averted an immediate crisis,” said European Commissioner for Economic Affairs Pierre Moscovici.

“It does not mean we approve those reforms, it means the approach is serious enough for further discussion,” he added.

However, International Monetary Fund (IMF) head Christine Lagarde expressed reservations about the reform proposals.

“In some areas like combating tax evasion and corruption I am encouraged by what appears to be a stronger resolve on the part of the new authorities in Athens,” she wrote in a letter to the Eurogroup.

“In quite a few areas, however, including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged.”

The IMF, ECB and the Commission make up the “troika” of institutions that have managed financial rescue programmes for Greece since 2010.

The four-month bailout extension was agreed on Friday after several rounds of talks, pending Greece’s delivery of its reform proposals.

, , , , , , , , , , , , ,

  • notimetoshine

    I doubt syriza can deliver the radical change promised during the elections. It seems like they may at most be able to dull the edges of the sharp and painful reforms and policies that seem likely to continue.

    There seems an intransigence within the EU and ecb. That may change if podemos make inroads in Spain. The Greek hope may lie in Spain. If a truly anti austerity movement becomes influential in somewhere like Spain or indeed Italy the protagonists at the centre of the EU and indeed in Germany may have to change the paradigm (hate that word but can’t think of another).

  • chrisjones2

    If a truly anti austerity movement becomes influential in somewhere like Spain or indeed Italy the protagonists at the centre of the EU and indeed in Germany may have to change the paradigm

    …. thereby undermining the Euro. Great

  • kensei

    This is only round one. The whole game essentially boils down to the level of primary surplus Greece must run in order to maintain credit and stay in the Euro. It looks like they’ve got some breathing room from 4.5% underneath it all. Their ability to deliver on their promises depends entirely on their ability to reduce the figure, both now or in four months. IAssuming, of course they are not prepared to exit the Euro – which they definitely seem to have ruled out.

    The other main worry is that if this fails, or if even if there is a significant backlash in Greece about Syriza being forced to negotiate, the beneficiaries might well be Golden Dawn. I suspect “they know what to do” to remain in power. Hungary already has pretty worrying fascist tendencies, I dont think we should be particularly keen to add another in Europe, particularly with how Russia is acting.

  • notimetoshine

    Or they take the realistic step of full fiscal and political integration. Which is really the only way I can see monetary union continuing in the future. Not that there is much if any support for it but they may not have a choice. The euro encountered its first economic crisis and didn’t exactly do a bang up job.

  • mickfealty

    That’s Krugman’s line… The realistic options are a lot more limited and problematic…

    When Wolfgang met Hugo… http://tiny.cc/siqkux

  • kensei

    Yup but the video isn’t really saying anything different. Greece needs a lower primary surplus. The ECB and Northern European countries could cut this deal fairly easily – the debt is big in Greek terms but not European – but don’t want to because of a mixture of the precedent and morality. The options are complex only because of the latter fact.

    So it comes down to manoeuvring for the second round, which was also in the video. Greece either needs a credible Plan B or to pursue a madman strategy. A Credible Plan B might just looking like having a plausible non euro option. I think there is a lot of blasé attitudes about an exit. It strikes me as worryingly similar to “We can let Bear Sterns fail”. You might get away with it, but you might not and the precedent might kill you anyway. It puts an option on the table that won’t go off. And it’s made worse if the Greek situation improves outside the Euro.

    A Greek exit may well be the endgame though. For the Euro to survive as a currency there needs to be either fiscal flow from rich to poor, higher inflation in richer countries or a combination of both. If Germany can’t accept it we are just waiting for the next crisis.

    The threat of extremist politics also seems real. Golden Dawn took a notable vote after all. And if you aren’t a teeny bit scared of the rise in extremist movements and the behaviour of Russia, I think you’ve not been paying enough attention. China as a potential role model for an authoritarian but relatively successful state also scares me a bit as we’ve not really had one of those before.

  • And Further detail on the state of play

    The Eurogroup said in a statement: “We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close co-ordination with the institutions.”

    The European Commission and the European Central Bank (ECB) both stated that the Greek proposals were a “valid starting point”.

    The agreement had “averted an immediate crisis,” said European Commissioner for Economic Affairs Pierre Moscovici.

    “It does not mean we approve those reforms, it means the approach is serious enough for further discussion,” he added.

    However, International Monetary Fund (IMF) head Christine Lagarde expressed reservations about the reform proposals.

    “In some areas like combating tax evasion and corruption I am encouraged by what appears to be a stronger resolve on the part of the new authorities in Athens,” she wrote in a letter to the Eurogroup.

    “In quite a few areas, however, including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged.”

    The IMF, ECB and the Commission make up the “troika” of institutions that have managed financial rescue programmes for Greece since 2010.

    The four-month bailout extension was agreed on Friday after several rounds of talks, pending Greece’s delivery of its reform proposals.

  • mickfealty

    Aren’t they both agreed that lowering the surplus is desirable, but it won’t be enough?

    That ‘restructuring looks pretty comprehensive to me, first round or not.

  • kensei

    They both agreed a compromise position of say 3% would not be enough. Everything was framed around them not getting 1.5%. Whether 1.5% would have been sufficient is not discussed.

    I’m also equally sure Very Serious People would insist on reform. That doesn’t necessarily mean they are right, to channel Krugman. But I suspect Syriza would agree to an extent in any case. They are pitching for running a 1.5% surplus, not completely renouncing debts and returning to deficit spending. As populist movements go, they seem quite tame.

  • Practically_Family

    Podemas taking the Spanish election is entirely possible, even likely.

    There isn’t enough time for Greeks to starve in the streets before that election must happen so…