Greek Prime Minister Alexis Tsipras on Friday rejected the financial aid proposal of introduced by foreign creditors overseeing the country's bailout, saying the Syriza government cannot accept "irrational" proposals that call for additional austerity measures while offering nothing in the way of debt relief.
In a rarely used move, Tsipras announced Greece would defer a series of payments to the end of the month as negotiations with the troika—the International Monetary Fund (IMF), the European Central Bank, and the European Commission—continued. However, the creditors are withholding $8.06 billion from Greece's international economic assistance program until those differences can be worked out.
The Center for Economic and Policy Research (CEPR) lauded the move, saying it shows that the troika can't dictate the terms of an agreement.
"This shows that the troika, and the ECB especially, is not holding all the cards, as many had thought," said CEPR co-director Mark Weisbrot. "The Syriza-led government in Athens meanwhile is demonstrating that 'elections have consequences,' and that the European authorities—who are mainly responsible for more than six years of depression in Greece—will also have to compromise."
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During a Parliamentary session on Friday, Tsipras reportedly said he was "unpleasantly surprised" by the proposal put forward by the troika.
"I would like to believe that this proposal was an unfortunate moment for Europe, or at least a bad negotiating trick, and will very soon be withdrawn by the same people who thought it up," he continued.
The Syriza government has proved its "commitment to the European ideal" by presenting comprehensive proposals to lenders, Tsipras said in an impassioned speech, adding that he is determined to reach a solution to bring a "new epoch for the European Union."
"Greece needs a solution, not just an agreement, otherwise it will never exit the long crisis," Tsipras said. Ministers of Parliament applauded when Tsipras said Greece would not be humiliated by its lenders.
"We want a deal that is economically viable and socially just," he continued. "This is [a] time of responsibility for all."
The decision to defer the $335 million payment "is rarely used — the last country to do so was Zambia in the 1980s — and highlighted the brinkmanship of Greece's negotiations, and the dire state of the country's liquidity," write Derek Gatopoulos and Elena Becatoros of the Associated Press.
"What they're saying to the creditors is, You're going to have to blink, we're not prepared to sign up to more of the same austerity and a continuation of what we've been going through for the last year," Simon Tilford, deputy director of the Center for European Reform in London, told the New York Times on Thursday.
As The Guardian provided live updates of the proceedings, the newspaper correspondent in Greece, Helena Smith, gave her take on the developments and the Prime Minister's speech:
The aim clearly was to keep pessimism at bay (perhaps the biggest enemy when it comes to Greece’s fragile banking system) and to win endorsement from the political opposition for the government’s rejection of the creditor’s “shock” proposal this week - crucial to the national unity that he now wants to present to the EU and IMF.
But the leftwing prime minister also risks being exposed by his own transparency: that the drama we have seen in recent days - from refusing to meet today’s IMF payment to rejecting the proposal made by lenders - is just another bargaining ploy.