Tsipras survives for now as Greek rebels try to stop rescue plan

[ATHENS] Greek Prime Minister Alexis Tsipras staved off an immediate challenge to his premiership, though failure to appease his party's hard-left fringe brought early elections into view.

After 12 hours of talks, the central committee of the anti- austerity Syriza party decided in the early hours of Friday to hold an emergency congress in September, in which Mr Tsipras' move to accept a strings-attached bailout from international creditors will be put to the vote. Leaders of the party's Left Platform protested that will be too late to stop the bailout, but failed in their bid to force a party congress this weekend.

With the government vulnerable, Finance Minister Euclid Tsakalotos meets representatives from international creditors on Friday to discuss the austerity measures his party has long opposed. The quarrel within Syriza, in power since January, means that Tsipras will have to rely on opposition parties' support to approve measures attached to Greece's emergency loans, a situation he has said isn't sustainable.

"Tsipras might call an early election as a way to reinforce his mandate," Roubini Global Economics analysts Brunello Rosa and Michelle Tejada wrote in a note to clients. "It cannot yet be known if a new government - or Tsipras's second mandate - would lead to stronger compliance with the creditors' terms or would merely be a sign of Tsipras's intention to push for better terms, including debt reduction."

Former Energy Minister Panagiotis Lafazanis, who leads the Left Platform, opposed the September confidence vote, arguing the government will have signed a new bailout with creditors by then, and it will be all but impossible to annul bilateral agreements ratified by parliament.

Mr Lafazanis led a revolt of more than 30 Syriza lawmakers, earlier this month, against upfront actions demanded by European states and the International Monetary Fund, effectively stripping Tsipras of his parliamentary majority. The central committee's decision to hold a congress in September, approving a motion by Mr Tsipras, "is a parody," the Platform said in a statement posted on Iskra, its website named after a newspaper managed by Russian revolution leader Vladimir Ilyich Lenin.

In a separate statement posted on the website of government-affiliated Avgi newspaper, 17 members of the central committee said they are resigning from the body, protesting the "transformation" of Syriza the into a pro-austerity party.

"The troika returns, the country signs off a new bailout attached to barbaric measures and collateralization of its wealth, German plans for Grexit haven't been called off, and the bankruptcy has already happened," the statement said. The group of 17 includes three Syriza parliamentarians associated with the Communist faction of the party.

Another Prime Minister Earlier on Thursday, Mr Tsipras had told the committee that he has tested the limits of Greece's economy and financial system, and the deal he reached for a new loan of as much as 86 billion euros (S$129 billion), was the best he could get. The government tried "in vain" to seek other sources of financing, Mr Tsipras added, and even its decision to fall into arrears on its debt didn't yield results.

"Whoever thinks another government and another prime minister would do better, they should speak up," he said.

After winning massive public support for rejecting more belt-tightening in a July 5 referendum, Mr Tsipras folded in the aftermath of bank closures and capital controls. The U-turn leaves Mr Tsipras on the same path trodden by predecessors including previous prime minister Antonis Samaras, whom Mr Tsipras had blasted for kowtowing to creditors' demands.

Finance minister, Euclid Tsakalotos, will welcome representatives from the European Union, IMF and European Central Bank early Friday while the premier will address lawmakers' questions in parliament around the same time. Today's meeting will be the first time since Syriza swept to power in January that representatives of the creditor institutions achieve access to a cabinet member.

BLOOMBERG