Greek Prime Minister Alexis Tsipras, struggling to contain a revolt in his left-wing Syriza party, said Wednesday his government would not implement reform measures beyond those agreed upon with lenders at a eurozone summit this month.
Tsipras faces a tough Syriza central committee session Thursday with many activists angered by his acceptance of bailout terms more stringent than those voters rejected in a July 5 referendum.
In a clear warning to party rebels, Tsipras said he could be forced to call early elections if he no longer had a parliamentary majority, and suggested an emergency party congress could be held in early September.
Pressure from creditors
At the same time, Tsipras is under pressure from Greece's creditors to go beyond the two packages of so-called prior actions passed by parliament and include unpopular steps to curb early retirement and tax breaks for farmers, EU sources said.
"I know well the framework of the deal we signed at the eurozone summit on July 12," Tsipras told Sto Kokkino radio. "We will implement these commitments, irrespective of whether we agree with it or not. Nothing beyond that."
With Greece close to the financial abyss last month, the government closed the country's banks for three weeks under a capital controls regime, and Tsipras was later forced to make the major concessions on reform and austerity in order to open negotiations on a third bailout worth up to 86 billion euros.
More reforms expected
A European Commission spokeswoman declined to say what additional measures were expected of Athens before the conclusion of the new bailout, although she said earlier this week that more reforms were due before the first aid is disbursed.
Tsipras said Greece's primary budget balance before debt service would break even at best or show a deficit this year, depending on a financial situation that has deteriorated sharply since the imposition of capital controls on June 28.
The terms for launching the bailout talks that began this week did not include specific fiscal targets, but Athens had previously been expected to achieve a primary surplus equivalent to 1 percent of annual Greek economic output this year and 2 percent in 2016.
Germany's Der Spiegel magazine reported that the creditors were willing to allow a gentler fiscal path taking account of Greece's return to recession, provided Athens pursued economic and administrative reforms more energetically.
With the banking squeeze easing, the European Central Bank kept its cap on emergency funding for Greek banks unchanged on Wednesday after Athens did not request another increase, a source familiar with the decision said.
The stock market remained closed because authorities are still waiting for a ministerial decree needed to resume trading after a nearly five-week shutdown, a senior official at the Greek securities regulator said.
The Athens Stock Exchange has been shut since June 29 after the government closed the banks and imposed the capital controls to stop a run on deposits by savers and companies.
European Commission spokeswoman Nina Andreeva, keen not to add to Tsipras's domestic problems, praised the conduct of the bailout talks so far, brushing aside talk of issues over security and access.
"We are satisfied with the smooth and constructive cooperation with the Greek authorities and that should now allow us to progress as swiftly as possible," she told reporters.
Intensive preparatory talks with officials from the Commission, the ECB, the International Monetary Fund and the eurozone's rescue fund, the European Stability Mechanism, began on Monday. The creditors' Athens mission chiefs are due to start negotiations with Greek ministers later this week.
Andreeva played down critical comments by Tsipras on the bailout made to his domestic audience, saying the commitments made at the summit were being carried out as foreseen.
Tsipras faces an uncertain vote in the 200 member Syriza central committee with sacked former energy minister Panagiotis Lafazanis leading a leftist faction that rejected the July 13 deal and is demanding a tougher line with the creditors.
Compounding his problems, former Finance Minister Yanis Varoufakis continues to pour abuse on the agreement in daily media interviews and articles, accusing the creditors of trampling on Greek sovereignty and justifying his own secret planning while in office to set up an alternative currency.
"It was a financial war," Varoufakis told Germany's Stern magazine in an interview released on Wednesday. "Today you don't need tanks to beat someone. You've got your banks."
Laughs off disclosures
European Economics Commissioner Pierre Moscovici laughed off Varoufakis's disclosures about a "Plan B" he had developed with a covert five-member unit that would have involved hacking into citizens' tax codes to create a parallel payments system.
"This is perhaps something for domestic politics. It's a career plan, a Plan C for Mr. Varoufakis," Moscovici told France's Europe 1 radio. "Everything done in a dilettante way is an absurdity."
In Germany, Greece's biggest creditor country, the leader of Chancellor Angela Merkel's Bavarian sister party warned that a Greek exit from the eurozone would cause "utter chaos" but might have to be accepted if Athens did not implement reforms.
"No one can predict the consequences of a Grexit other than that a lot of Greece's debts would have to be written off and at the same time monetary help would be necessary," Bavarian state premier Horst Seehofer told German newspaper Die Welt.
"On top of that there would be utter chaos. If Greece were not prepared to reform, a path like that would have to be accepted but one shouldn't strive for it oneself or organize it," he added.