Bankruptcy is a real possibility for Greece. Does its leader have a plan? – Washington Post

Even Greek Prime Minister Alexis Tsipras’s inner circle appeared Wednesday to be asking the question that has been on the minds of European Union leaders for months: Does he have a game plan as bankruptcy looms in his struggling Mediterranean nation?

The charismatic prime minister’s path toward political survival seems to be quickly narrowing. Just five months after the leftist Tsipras swept to office amid bold promises to reshape Europe’s ­debate about how to secure its economic future, his nation may be pushed off the euro if it votes Sunday against its creditors’ tough austerity demands. And if Greeks defy Tsipras by voting to take the E.U. deal, he will face heavy pressure to resign.

Tsipras started his Wednesday by making concessions — and ended it with defiance. In an early-morning missive to Greece’s creditors, he offered to implement most of Europe’s painful restructuring demands in exchange for a new bailout. Just hours later — and after a near-rebellion by his allies — Tsipras took to the airwaves to denounce E.U. “blackmail” and called his nation to rise up against austerity.

“On Monday, the Greek government will be at the negotiating table after the referendum, with better terms for the Greek people,” Tsipras said in a fiery television address. “You’re being blackmailed.”

For all his fancy footwork, however, Tsipras may finally have backed himself into a corner. He has said he will implement only overhauls that are approved by voters, but in so doing, he has alienated nearly all the democratically elected leaders of the rest of the 19-nation euro zone.

The consequences came over the weekend, when Greece was forced to shutter its banks and severely restrict the amount of money citizens can withdraw from ATMs. The moves have been a painful blow to people who suddenly cannot pay for medications and other vital expenses.

The maneuvers that followed have nearly lost Tsipras many of his allies. Top officials of Tsipras’s Syriza party on Wednesday were stunned by his morning concessions. They were convinced that he was about to call off the referendum — and several said that if he did so, he would lose their support.

“There’s going to be a struggle inside the party,” said one senior Syriza official, who spoke on the condition of anonymity to discuss internal party discussions. Minutes later, Tsipras announced that the referendum would go ahead. Several party leaders later said that his speech had been delayed for three hours as they argued.

The back-and-forth shocked European leaders — and they appeared to have lost patience , speaking in unusually forceful terms. Just days ago, Greece and Europe appeared close to forging a deal. But Tsipras torpedoed the negotiations with his surprise call for the referendum.

“We don’t know if the Greek government is going to hold a referendum or not, whether it is for or against it,” German Finance Minister Wolfgang Schäuble told the lower house of Germany’s Parliament on Wednesday before Tsipras affirmed his plans to go forward with the plebiscite. “You can’t, in all honesty, expect us to talk with them in a situation like this,” Schäuble said.

Tsipras’s Greek critics said he was trying to play to both sides: as a conciliatory man toward Europe, and as a fiery advocate for Greeks’ rights at home. By trying to do both, he was winning the support of neither, they said. “He’s using two kinds of languages,” said Takis Michas, an ­Athens-based ­political commentator.

Tsipras’s fate will be a test of the viability of his efforts to recast debt forgiveness as democracy. He has said that the Greek economy would flat-line if it fully repaid the money it borrowed in previous years and sought forbearance from creditors based on his public support.

But under euro-zone bailout rules, new lifelines require the authorizations of parliaments across the currency zone, many of which would be expressing the democratic will of their own electorate if they cut off Greece completely.

Legislative approval is in particular doubt in Germany, where lawmakers say they do not think the Greek leadership will hold to its commitments.

“To restart these negotiations, we will need to build on the issue of trust,” said Ralph Brinkhaus, a lawmaker from German Chancellor Angela Merkel’s political party and a spokesman for the party on financial affairs.

Across Europe, observers on Wednesday were trying to comprehend Tsipras’s topsy-turvy strategy. The Greek leader did not say what he would do in the event of a “yes” vote on Sunday, beyond saying he would respect the will of the people. Analysts said he may resign.

“I can’t see this government implementing the kind of proposals that need to get done” if Greeks vote in favor of austerity, said ­Diego Iscaro, a Greece expert with IHS Global Insight in London.

Greece will be unstable even if Tsipras resigns, leaving behind a weak caretaker government in a poor position to negotiate. Although new elections could be called quickly, one possibility in Greece’s fragmented political scene is that Syriza may simply win again, Iscaro said.

Europe’s quick rejection of Tsipras’s concessions on Wednesday was a measure of how much trust he has lost, said Alexander Kritikos, an economist at the German Institute for Economic Research. The new Tsipras plan appeared to come within 1 billion euros of the kind of savings Greece’s creditors were looking for — meaning the two sides were not wildly far apart. But the actual terms, he said, were less important than the distrust that has taken hold between European leaders and Tsipras.

“It doesn’t matter now if they were only 1 euro away from a deal. They won’t agree to anything the Greeks are offering now. There is no more trust,” Kritikos said.

Visitors to Athens’s central Syntagma Square were treated Wednesday to a hefty dose of the government’s confused messaging. A giant banner placed on the front of the Greek Finance Ministry around midday could not have been clearer: Vote “no to blackmail and austerity” on Sunday, it exhorted, echoing the rallying cry of Greeks furious with five years of painful cuts.

But on Twitter, Greek Finance Minister Yanis Varoufakis disavowed it, saying the banner was “not in my name.” He said it was the unauthorized work of trade unionists. Eventually it was taken down. Four hours later, Varoufakis published a post on his blog: “Why we recommend a NO in the referendum — in 6 short bullet points.”

Faiola reported from Berlin. Stephanie Kirchner in Berlin contributed to this report.

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