Tsipras Threatens Snap Referendum on Greek Bailout Reforms

"I propose to the central committee to hold an emergency congress to discuss being in power as leftists, our strategy in the face of bailout conditions," he said. 

Referring to the date he agreed to the conditions for the latest bailout agreement, he said: "There is another view, which is respected, that doesn't accept the government's analysis and believes there was an alternative available in the early morning hours of July 13. If this is the case….then I suggest the party hold a referendum on this crucial question."

Tsipras came to power on a promise to fight for a better deal after five years of austerity and two bailouts, leaving the country teetering on the edge of bankruptcy. The Greeks, in June, rejected the bailout conditions proposed jointly by the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB) – known as the Troika –  leaving Tsipras to renegotiate a third bailout.

In the event, in July, the troika returned with an even tougher set of conditions that are the subject of talks underway this week. But those conditions have split his party down the middle.

Tough Times Ahead for Athens

The conditions included Greece passing emergency legislation within days.  By July 15, it has to pass laws "streamlining the VAT system and broadening the tax base to increase revenue". Greece has long had a tradition of tax avoidance and a benign tax-gathering regime.

By the same date it also had to pass legislation taking "upfront measures to improve long-term sustainability of the pension system as part of a comprehensive pension reform programme."

Again, Greeks have long enjoyed an unsustainably generous state pension system, which allowed Greek citizens to retire many years younger than their European counterparts. 

It was also forced to implement the relevant provisions of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, which – in effect was a pact to make drastic cuts in state spending and allow the troika the powers to monitor their implementation. This has been the cause of much rumbling within Greece, as many see this as allowing foreigners to interfere in sovereign powers.

By June 22, the Greek Government was forced to pass laws to fundamentally tighten Greece’s legal and banking system. This was a precondition the troika demanded, because the Greek banking and regulatory system had been in need of reforms for decades.

Without having passed all these laws, the Troika refused to even begin talks over the third bailout.

However, Tsipras’ party has been split over the conditions and he is under severe pressure at home from many who say he has given in to the hated Troika and has gone against the fundamental principle of his party, which is to fight against the tough austerity measures.

Many feel that the pension and tax reforms that Tsipras signed up to are too much and that other reforms – including shops opening on Sundays, longer opening hours, changes to pharmacy ownership, new milk and bakery rules and the sale of state assets, including ports and mass privatization – are a step too far.

His threat of a snap referendum could plunge Greece into another crisis, if the party goes against what Tsipras agreed with the troika in return for a third bailout.