Greeks bearing shifts

Greek wordplay paves way for bigger U-turn

Greek leader Alexis Tsipras has made a U-turn of sorts. His government has for the first time agreed to extend its bailout with European creditors, and accept further supervision from the European Commission, the European Central Bank and the International Monetary Fund. Yet the wording is nebulous and the commitment to reforms weak. He will need to make further concessions.

There's no doubt the letter from Greek Finance Minster Yanis Varoufakis to his euro zone peers marks some progress in the impasse between Greece and euro zone creditors. Greece's new left-wing government had balked at extending the previous bailout, dating back to 2012, which it blames for prolonging Greece's five-year recession. Without a deal, it will be unable to repay debt and may have to leave the euro zone.

The key words are all there: Greece will ask for an "extension" and process towards the "successful conclusion" of the "current arrangement," so that a new bailout can then be agreed. In the interim Greece won't increase spending without approval. It will even agree to supervision by the European Commission, the ECB and IMF - the dreaded troika - during that period.

The letter leaves room for haggling with euro zone partners. Greece will take steps that will "assist in the attainment" of fiscal targets for 2015, but only if they take into account the "present economic situation," implying deviation from the target of a three per cent primary surplus. Jeroen Dijsselbloem, head of the group of euro zone finance ministers, has hinted that it could allow some "flexibility," though the Eurogroup may not stretch to Greece's pervious demands for a 1.5 per cent surplus.

There are more substantive problems. Greece's commitment to its programme is half-hearted. The draft proposal rejected on February 16 by Greece required the country to reform labour markets and pensions, and privatise assets. That's nowhere to be seen in Greece's request. The language is deliberately vague: Greece will avoid "technical impediments" to the programme and recognises its "financial and procedural content."

Small wonder the German government has received the Greek letter coolly. But Berlin's obstinacy can be taken with a pinch of salt. Angela Merkel does not want to be seen as the one pushing Greece out of the euro. Being hard-headed as long as possible is part of her bargaining strategy.

Tsipras has at least shown he can compromise. While creditor nations in general and Germany in particular will want stronger commitments, Greece should at least have got its foot back in the door.