Greece debt crisis: Socialists join defeated austerity party in anti-Syriza coalition

The Socialists and the Potami party are joining forces with the right-of centre New Democracy party, declaring support for staying in the eurozone

Antonis Samaras headed Greece’s last austerity government before losing the vote in January 2015 (EPA)

Three of Greece’s opposition parties have declared their support for remaining inside the eurozone on the terms proposed in next weekend’s snap referendum, thus effectively backing a plan the government itself had attempted to negotiate, but from which it eventually walked away.

The left-leaning Socialists and the centre-left Potami party – formed two years ago to fight for Greece to stay in the euro – are joining forces with the right-of centre New Democracy party, whose embrace of austerity measures led it to defeat at the election earlier this year.

In a scathing attack on the ruling Syriza-led coalition, Greece’s former prime minister and New Democracy leader Antonis Samaras said that, for all the government’s expressions of enthusiasm for remaining within the euro, the referendum would drag the country out of the single currency if there was a “no” vote. “With this referendum, they’re bringing the country just one step away from leaving the euro,” he said. At the weekend he had previously declared that such an outcome would mean “bankruptcy, euro-exit, suicide”.

Anger felt by some Greek politicians at the behaviour of the prime minister, Alexis Tsipras, grew as the obscure wording of the referendum question that will be put to Greeks on 5 July emerged. “Should the agreement plan submitted by the European Commission, European Central Bank and the International Monetary Fund to the June 25 eurogroup, and consisting of two parts, which form their single proposal, be accepted?” it will ask.

The question on the ballot paper continues in explanation: “The first document is titled ‘Reforms for the Completion of the Current Programme and Beyond’ and the second ‘Preliminary Debt Sustainability Analysis’.”

The government is urging Greeks to reject the European plan but is unclear what would follow if that is the outcome of the referendum, and has never seemed as far apart from its international creditors as it does now.

Mr Tsipras criticised the EU for cutting off sources of funding in the run-up to the referendum. According to government sources, the 40-year-old leader said that by refusing to supply the liquidity that Greek banks needed, thus forcing them to close the week before the referendum, the EU was obstructing the Greek people in exercising their right to vote, leaving them “outside the democratic tradition of Europe”.

One of the major premises on which the left-led government built its strategy was the belief that international creditors would eventually meet Greece’s conditions, fearing a grave disruption to capital markets and the euro. But the institutions were not willing to back down on their demands as the deadline to repay tonight’s crucial IMF loan approached.

The Syriza-led administration’s use of a referendum as a negotiating tool appears not to have had the expected effect, as it became clear that Europe’s markets were mostly taking the prospect of Greek exit from the euro in their stride, with only relatively minor dips in prices.

For Mr Tsipras, their reaction could be crucial. “If the financial markets recover in a few days or a week, then Greece loses its bargaining power,” said Nick Kafkas of Merit securities. “Even if you strike a deal with this administration it will be difficult for creditors to trust them.”

Some commentators suspect that Mr Tsipras would privately prefer Greece to leave the euro – a position that his party once took, though staying in the euro is now party policy. Meanwhile, others are asking how, if Greeks vote to accept the bailout conditions, Mr Tsipras could possibly lead the government back into talks with the EU. If Greeks vote against, it will be the ultimate test of nerve for both sides.