While Greeks voted NO, Tsipras will promote the YES voters views

Greeks rejected a proposed deal that their government had put to a referendum rather than accept. The same government is now agreeing to negotiate an agreement that will bring even more austerity and harsher conditions.

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While over 60 percent of Greeks voted NO to acceptance of a plan proposed by creditors that would have continued and even increased austerity measures imposed as part of the previous bailout loan, the NO voters have in effect lost. The Greek government is returning to negotiate but has already erased the two red lines remaining in their former negotiating stance and acceded to the demands of creditors that the Finance Minister Yanis Varoufakis resign.

There is one possible bright spot in negotiations — the issue of a partial debt write-off is being pushed by the IMF, although this would come at the cost of further cost reductions such as pension cuts. Christine Lagarde, head of the IM,F said Greece needs to continue cost-cutting reforms: "The other leg is debt restructuring, which we believe is needed in the particular case of Greece for it to have debt sustainability. That analysis has not changed. It well may be that numbers may have to be revisited but our analysis has not changed."

It is not clear if other creditors will agree to this. It will be politically unpopular in many EU countries to have debt owing to their treasuries by Greece to be written down. Some countries may be even pressing for creditors to force a Grexit on Greece rather than providing Greece any more loans at all. Yet Greek negotiators are still taking the position that they will do whatever is necessary to reach a deal. Immediately after the NO vote this was evident.

The finance minister, Yanis Varoufakis, had announced that if the YES vote was successful he would resign. The NO vote triumphed by a large margin showing that the majority of Greeks supported Varoufakis' position that Greece simply could not be forced to suffer even more austerity. Instead of working with others to put pressure on creditors for a better deal, what does he do? He resigns. Even in his resignation statement, it is clear that his resignation is acceding to creditors' demands:Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today. I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.

So the first thing that Tsipras does with his new mandate is give in to a suggestion that Varoufakis, who sometimes annoys officials on the other side, must resign.

The irony to this is that Varoufakis has not been meeting with the creditor groups since late April. The new finance minister Euclid Taskalatos has been in charge since then and Varoufakis only remained behind the scenes. The fellow that was involved until the very last and rejected the final offer along with Tsipras was Taskalatos. Nevertheless even though the move is mostly symbolic, the Greek government must show its willingness to accede to creditor demands, a position that the Greek populace had just rejected.

Instead of keeping its red lines on pension reform and taxes, a letter from the Greek government to the European Stability Mechanism is requesting a three-year loan explicitly promises that it will meet demands by creditors for reforms in those key areas: The Greek government promised on Wednesday it would start pension and tax reforms next week, as demanded by creditors, in return for a three-year loan to drag its financial system back from the brink of collapse.The complete letter can be found here. It was signed by Euclid Tsakalotos, the new finance minister.

The letter does say the Greek government will implement a set of measures related to tax reform and pension related measures. However, it gives no details at all. We should know tomorrow if the measures measure up to creditor demands . They have not in the past. These measures are to be implemented as early as next week. At least the letter promises the Greek government must produce specific reforms by tomorrow: The Greek government will on Thursday 9 July at the latest set out in detail its proposals for a comprehensive and specific reform agenda for assessment by the three Institutions to be presented to the Euro Group.

The letter is a masterful construction that brings up the issue of shaving down debt while promising to meet all its financial obligations:As part of broader discussions to be held, Greece welcomes an opportunity to explore potential measures to be taken so that its official sector related debt becomes both sustainable and viable over the long term.Greece is committed to honor its financial obligations to all of its creditors in a full and timely manner.

We reiterate the Greece's commitment to remain a member of the Eurozone and to respect the rules and regulations as a member state.There is not even the slightest hint of any threat to leave the euro zone should the government be required to erase their red lines and also sell out their own citizens.

There are no doubt splits between creditor groups. It may very well be that a majority of creditors have already decided that there will be no more loans and that their own Plan B for a Grexit should start to unfold. This at least would be more in keeping with the NO vote even though it will impose even more suffering on the Greeks over the shorter term.

Eurogroup demands its reforms before it releases cash to Greece

The Eurogroup of finance minister meeting in Riga Latvia had harsh words for Greek Finance Minister Yanis Varoufakis as they refused his bid to find a shortcut to get badly need financial aid.

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Jeroen Dijsselbloem, the chair of the euro-zone finance ministers, ruled out any partial aid payment, such as Varoufakis has requested, in exchange for fewer and narrower reforms:“It was a very critical discussion and it showed a great sense of urgency around the room,” Dijsselbloem said at a press conference after the meeting. Asked if there was any chance of a partial disbursement, he said, “The answer can be very short: No.”Also, Dijsselbloem told reporters at the end of the Riga meeting: "I'll be quite frank - it was a very critical discussion. We had hoped to hear a positive result..we are still far from that."Varoufakis was severely criticized for not bringing forward and implementing the "reforms" demanded of creditors including to pensions and the labor market even though such changes are termed by the Greek government as "red lines" that cannot be crossed. Perhaps the government is intending to show the Greek public that any reform is impossible within the EU. However, there seems to be little or no planning by the government for a possible Grexit or exit from Greece. Given the situation, and the positions of each side, it is hardly surprising that no agreement was reached at the meeting in Riga Latvia yesterday. The discussion on Greece at the meeting lasted little more than an hour. Dijsselbloem made it crystal clear that no funds were forthcoming unless Greece delivered on the reforms demanded: "A comprehensive and detailed list of reforms is needed. A comprehensive deal is necessary before any disbursement can take place ... We are all aware that time is running out."He also warned that if there were no deal completed by the end of June, the 7.2 billion euros in the loan would no longer be available and that creditors would not talk about longer term funding until a full interim agreement was reached.

An anonymous person familiar with the talks said that the finance ministers described Varoufakis as behaving irresponsibly in the talks, and being a gambler, time-waster, and amateur. In spite of this, Varoufakis himself said the two sides were now "much closer together" and that Greece was intending to achieve a deal as soon as possible. The president of the European Central Bank(ECB), Mario Draghi, threatened to even increase the pressure on Greece and warned that ECB policy makers might review the conditions set for emergency funding of Greek banks. The council governing the regulations is said to meet as early as May 6.Some ministers accused Varoufakis of backtracking on commitments he had made and failing to understand the deep differences that divide the Greek government from the position of Greece's creditors. Many eurozone officials believe that without new funds, Greece could default on debt by the middle of May. However, no one seems to know for sure.

The finance ministers were angry that the Greek Prime Minister Alexis Tsipras had met with German Chancellor Angela Merkel on Thursday a day before their meeting in an attempt to get her to approve financial aid and bypass them. He also met with French President Francois Hollande as well. Merkel said that she is not prepared to override the controls requiring that the finance ministers approve any release of funds. Greek Finance Minister Varoufakis also irritates the finance ministers by sending contradictory messages and little detail about the Greek financial situation. Varoufakis described the Friday talks as "intense" and told reporters after the meeting: “The cost of no solution would be enormous, not only for us but also for all."

The situation is becoming so critical that some finance ministers including from Germany and Slovenia have said that the group is considering plans as to what should be done if no deal can be reached with Greece by the end of June when the present bailout loan expires but large Greek debt repayments become due over the summer.

Greece denies that it is making plans to default on debt payments

As has happened often during negotiations with its creditors, mixed and contradictory messages are coming from the Greek Syriza government.

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The Financial Post reports that the Greek government is preparing to default on its debt if it can't reach a deal with the Eurogroup creditors by the end of this month. One government official claimed:“We have come to the end of the road . . . If the Europeans won’t release bailout cash, there is no alternative [to a default].” There are 2.5 billion euros of payments due to the International Monetary Fund in May and June. The government may be using the threat of default as leverage to receive a better deal from creditors but there is little sign that it is working.

Negotiators for the creditors appear to be exasperated by the Greek government's lack of movement towards presenting and implementing a set of acceptable reforms. There is no sign that any funds from the extended bailout loan will be released until that happens. European Commission Vice President Valdis Dombrovskis said that the mood between the Greek government and negotiators had been tense:"Talks are very complicated. Time is running out. Greece should come up with an ambitious reform list in line with its bailout program and also start to implement it."The Euro Working Group of deputy finance ministers gave the Greek government a deadline of six working days to present a revised economic reform plan. The next meeting of the eurozone finance minister is set for April 24. Dombrovskis claimed that the finance ministers had done their best to be flexible but Greece had to do more.

Whether the Greek negotiators are using the threat of default as a negotiating tactic or not, the depletion of Greek government coffers and the need for more cash is a reality as payment of pensions and salaries become due as well as loan payments. Investors are unsure whether there will be a forced exit of Greece from the eurozone or even perhaps an election called again if no agreement is reached.

Syriza has not only passed legislation on poverty and home foreclosures condemned by its creditors but also has steadfastly refused to address what the Financial Times calls "politically sensitive structural economic reforms":

These included an overhaul of the pension system, including cuts in the payments received by Greek pensioners, and measures to permit mass dismissals by private sector employers.

In spite of promising to meet Greece's international debt obligations, the finance minister Yanis Varoufakis said that the government's top priority is its domestic commitments and this included an obligation to continue paying pensions. Surely, it should be evident by now that Greece cannot do what its creditors demand while also meeting its "domestic commitments."

Nevertheless a Greek government spokesperson denies that it is preparing a default if it cannot reach an agreement with creditors on bailout terms or that it might call an early election afterwards. The spokesperson said that negotiations were proceeding swiftly towards a solution. A solution is needed since the Greek government needs 2.4 billion euros to pay salaries and pensions this month. On the first of May it needs to pay the IMF 203 million euros and another 770 million euros on May 12. Greek prime minister Alexis Tsipras maintains that Greece will simply be unable to service its debt without funds from the European Union.

Syriza not even able to win symbolic victory but tops in rhetorical flourishes

Mario Draghim, president of the European Central Bank(ECB), told Greek officials in Brussels that the Greek government must allow technical representatives representing the European Commission, the ECB and the IMF to start work in Athens on Wednesday.

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These three institutions are the Troika charged with overseeing Greece's compliance with the terms of the bailout agreement. The European Commission and the International Monetary Fund(IMF) had the same message. Originally the Greek government claimed it would not negotiate with the Troika and the group did not go to Athens as is usually the case. Instead of being referred to in most documents as the "Troika," the new term is the "institutions" even though the reality is exactly the same. The Greek government was able to move the meetings discussing the proposed reforms to Brussels rather than Athens. However technical personnel from the Troika insist they need to go to Athens to examine the government books. Greece has given in and agreed to that.

Jeroen Dijsselbloem, chair of the Eurogroup of finance ministers said:“The important thing is that we’re starting the technical work between the troika institutions and the Greek government. It needs to start to bear fruit.”

Note that Dijsselbloem sneaks the term "troika" back into his description as if to remind the Greek government of the reality that they are still dependent on the Troika whatever the rhetoric from the ruling party Syriza. Dijsselbloem said the list of reforms presented by Greece last week was far from complete and not enough. He also complained that Greece was not moving quickly enough to implement what had been already agreed and wasted time arguing about where meetings should be held: "We seem to be losing time now - since the last eurogroup little has been done in terms of future talks, in terms of implementation. We have spent the last two weeks discussing who will meet who, where, and in what configuration. It’s been a complete waste of time."

The problem for Prime Minister Alexis Tsipras is that he is trying to salvage at least some of his campaign promises and get relief from some of the austerity policies imposed upon him by conditions of the Greek bailout. While there are some reforms that are at least agreed upon in principle by the two sides, such as tackling corruption, and tax evasion, even on these issues there are disagreements about some policies. However, with respect to some other issues such as privatization and humanitarian issues such as raising minimum wages, and rehiring government workers, the two sides disagree entirely.

Greece could face a cash crunch in a matter of weeks. Even to make a recent payment the government had to "borrow" from social security funds and issue more treasury bills. Greek sovereign debt is no longer eligible to be used as collateral in liquidity operations. The interest rate on treasury bills is higher than it would be if they could participate in the sovereign debt purchase operations to obtain funds.

While Greece has not even achieved a symbolic victory, since the Troika are going to Athens to examine the books, the Greek Finance Minister spins the situation to suit the demands of his constituency back home: “The troika is a cabal of technocrats that used to arrive in Athens and enter the ministries with a kind of power play that smacked of a colonial attitude. That practice is finished. We shall endeavor to do whatever it takes to provide the institutions with whatever information they need.”Who does he think the people are that he just agreed could go to Athens to look at the books?

To give Varoufakis even a symbolic victory is just too costly as far as the Dijsselbloem is concerned. Hundreds of Greek officials would need to be flown to Brussels to do the work there. The troika cabal of technocrats will return to Athens even if Varoufakis will not call them that. He agreed that the technical people could start Wednesday. German Finance Minister Wolfgang Schaeuble agreed that if the Greeks want it the troika could be renamed "the institutions":If Greece wants that, one can of course negotiate with the three institutions which we should no longer call the troika, but which is the troika,”The Troika smells just as sour by any other name. Notice that in the video appended only the term "institutions" is used not the Troika. This is a great semantic leap forward for Syriza.

The stock markets are declining in Europe and also North America. Gold has come off its lows in reaction to increased concern that Greece may default on its loans soon.

Creditors press Greek government to meet bailout conditions

- Greece submitted a draft list of reforms to the Eurogroup and "institutions" -formerly known as the Troika- on Friday ahead of a crucial meeting next week that the Greek government hopes will result in the release of more aid.

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In an eleven page letter, there were seven reform proposals. They include measures to improve government budgetary procedures, to help stamp out tax evasions, but also to deal with what Syriza describes as the humanitarian crisis, particularly among the poor. Greece is trying desperately to keep some of its campaign promises. However, the agreement for the bailout stipulates that any such humanitarian measures must not negatively impact on Greece's fiscal status. The proposed 200 million euro anti-poverty campaign would be offset in part by cutting central government spending by 61 million euros. The rest might come from the new tax regulations on internet gambling.

As part of the tax reforms, the Greek government proposes that the length of time for repayment of tax arrears should be extended. There would be new rules that would regulate and tax internet gambling providing a new source of tax revenue. The government estimates that up to 500 million euros could be generated by these new regulations.

While an agreement with EU creditors was reached last month to extend the current bailout of 240 billion euros ($263 US) for four months, Greece is still required to flesh out its reform program and gain approval of the reforms before any further funds will be released.

Meanwhile Greece has been scrambling to find cash to pay for debts coming due this month as its cash reserves dwindle. Greece was able to repay 310 million euros just last week but only through "borrowing" from pension funds and issuing more treasury bills with high interest rates. Greece has not so far been allowed to participate in the bond buying program that will help other euro zone members. Only if Greece presses ahead with reforms demanded by creditors is there any hope of Greece being allowed to participate. Creditors are making use of Greece's perilous financial position to force it to implement reforms that are often counter to campaign promises made by Syriza.

The Eurogroup of the euro zone 19 finance ministers is set to meet on Monday March 9th in Brussels to consider the Greek reform proposals. Even if the group approves of the Greek proposals, officials said no decision was expected on Monday to release more aid. Technical experts from the Troika or "institutions", the European Commission, European Central Bank, and International Monetary Fund need to meet to assess the Greek proposals. However, the Syriza government no longer recognizes the Troika and does not want their experts coming to Athens. There were still discussions with Greece as to where the meeting might take place. In the old days when there used to be a Troika they would simply go to Athens.

A senior EU official in Brussels claimed that Greece could obtain early access to funds if it reaches a comprensive agreement with the Troika or "institutions":"The institutions will look at all these measures. Then they will come to an agreement with the Greek authorities. Then you agree on prior actions, and when the prior actions have been fulfilled then comes the disbursement,"The same official noted that technical discussions on reforms had not even begun. Spokesperson for the German Finance Ministry Martin Jaeger thought it unlikely that there be an early disbursement of funds. While admitting that an earlier disbursement was possible he thought it unlikely in the present case. Jaeger said: "From our point of view there is no basis for that."

Some within Syriza are suggesting that hopes for any reform within the euro zone system are misguided and that the Greek government should be making plans to default and restore use of the drachma. Costas Lapavistas, a Syriza MP and economics professor, argues this case in a Guardian article.

Greek Prime Minister insists that Greece will not seek a third bailout

Alexis Tsipras, the Greek Prime Minister, announced that Greece will not seek a third bailout when the extension of the present bailout runs out in four months time.

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Tsipras, the leader of the major government party Syriza, made the announcement in an address to parliament that was on Greek TV. Tsipras has just four months to negotiate something to deal with the large payments coming due shortly after the four month period is ended. Tsipras, may simply have announced another name change as happened with the Troika. Tsipras and his finance minister, Yanis Varoufakis, refused to extend the bailout originally and would not meet with the Troika of the European Commission, European Central Bank, and International Monetary Fund to renegotiate an extension of the bailout. Varoufakis did meet with the Eurogroup of finance ministers and the "institutions" that included the Troika were also involved and eventually reached a deal under the original terms so that in the end there was a four month extension of the original bailout agreement. The plan may be to remove the term "bailout" in any new agreement. The old wine will be put in new bottles but with new labels as well. Tsipras' remarks came just a few hours after German legislators had approved the four month extension of the present bailout but with some votes against the extension.

Tsipras said: “The bailout agreements are over, both in form and in essence. Some people are betting on a third bailout in July … but we will disappoint them.”

Some leftist groups in Greece such as the Greek Communist Party oppose the Brussels agreement, so Syriza must describe their policy in a positive fashion and as being a replacement for the hated austerity conditions of the original bailout deal. Any new deal in July must also have a positive new description even though it will be very much like other bailouts and will be described as such by the Eurogroup.

Tsipras claims that Greece has been successful in separating the loan agreement from the "disastrous" austerity conditions imposed by previous governments. That is far from the truth. Indeed the terms of the extension were based upon the existing agreements. As a Eurogroup statement put it:

The Eurogroup notes, in the framework of the existing arrangement, the request from the Greek authorities for an extension of the Master Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of commitments. The purpose of the extension is the successful completion of the review on the basis of the conditions in the current arrangement, making best use of the given flexibility which will be considered jointly with the Greek authorities and the institutions. This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece.The MFFA is the original bail out plan "underpinned by a set of commitments" which would include the austerity reforms. Interestingly, the Eurogroup statement already refers to a "possible follow-up arrangement" rather than a bailout. The best that Tsipras can take from this is that the "given flexibility" might be employed to change some conditions but only with the agreement of the EU group.

At a two-day meeting of the Syriza central committee, Tsipras said that Syriza had won the battle for an extension of the loan agreement even though the party sold out on most of its key commitments during the election campaign and did not actually manage to forge a new agreement outside the original agreement.Tsipras noted that many forces were against the new government: "We joined the battle in Europe with every step undermined. The most aggressive European conservative forces, in cooperation with the (ex-Premier Antonis) Samaras government, had sprung up a trap to derail us before we had even governed.They had everything set up to shipwreck us ... and the country."

Tsipras singled out Spain and Portugal as countries opposing Greece, since both countries worry that any gains by Greece could encourage anti-austerity forces in their own countries. Spain in particular faces upcoming elections with the anti-austerity party Podemos growing in strength. Tsipras claims: "We found opposing us an axis of powers ... led by the governments of Spain and Portugal which for obvious political reasons attempted to lead the entire negotiations to the brink,Their plan was and is to wear down, topple or bring our government to unconditional surrender before our work begins to bear fruit and before the Greek example affects other countries. And mainly before the elections in Spain."

Greece did come close to what was an unconditional surrender. However, when it comes to politics, rhetoric often trumps reality.

Greece's proposed reforms for bailout deal accepted by Eurogroup but with reservations

The Greek Finance Minister Yanis Varoufakis sent a letter to Eurogroup President Jeroen Dijsselbloem just before the deadline of midnight Monday that outlines proposed reforms that Greece was willing to undertake to receive bailout funds.

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The complete text of the letter can be found here or here. Many of the reforms have to do with tax collection and the tax system, an area that both Syriza and its EU partners agree is in drastic need of reform. There is also an emphasis on tackling corruption. While there are sections that deal with tackling poverty and humanitarian issues, these are always treated as being addressed in a manner that does not impact negatively on the fiscal situation.

Under the final section entitled the Humanitarian Crisis there is a section that an article in the Business Insider considers could redefine how we view the modern welfare state. The proposal is for a guaranteed minimum income(GMI). While this is often supported by leftists, it is also supported by many on the right The libertarian right sees the system as a replacement for the many separate welfare schemes that have grown in advanced capitalist societies with a single payment that could be spent by the recipient at will and without bureaucrat intervention. This contrasts with other right wing groups who want to ensure that welfare is narrow and targeted and goes only to those who are "deserving". The idea has been supported by free market ideologues such as Milton Friedman and Friedrich Hayek.

Hayek said:There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend. To enter into such an insurance against extreme misfortune may well be in the interest of all; or it may be felt to be a clear moral duty of all to assist, within the organised community, those who cannot help themselves.Hayek's formulation for the GMI is much more idealistic than that presented in the Greek reform proposals. Here is part of the context of the Greek GMI reforms as set out in the letter: • Evaluate the pilot Minimum Guaranteed Income scheme with a view to extending it nationwide.• Ensure that its fight against the humanitarian crisis has no negative fiscal effect.So any expenditure on the GMI will presumably need to be revenue neutral or paid for by saving elsewhere. Another passage makes it clear that the GMI is actually intended to discourage early retirement which would cost the state more in pensions.The reforms promise to:"..provide targeted assistance to employees between 50 and 65, including through a Guaranteed Basic Income scheme, so as to eliminate the social and political pressure for early retirement which over-burdens the pension funds."

This would allow those between 50 and 65 who may become unemployed through becoming jobless, no doubt in some cases through the measures accepted for the bailout loan, to remain in the job market until conditions improve for them without opting for early retirement which would cost the government more.

Another supporter of the GMI is Sam Bowman, deputy director of the Adam Smith Institute who writes: "The ideal welfare system is a basic income, replacing the existing anti-poverty programmes the government carries out (tax credits and most of what the Department for Work and Pensions does besides pensions and child benefit)...Like the current benefits system, this would provide a safety net. But ‘benefits traps’, where people lose as much in benefits as they earn from work, would be eliminated."

The role of the GMI as presented in the Greek reforms is to save money not solve the humanitarian crisis. This may be a means by which Greece is trying to sell the program to its partners. For those who would earn more if they could choose early retirement when laid off the GMI would represent a decline in income. The GMI is hardly the revolutionary new program the Business Insider describes:In the First Muslim Caliph, Abu Bakr introduced a guaranteed minimum standard of income, granting each man, woman, and child ten dirhams annually; this was later increased to twenty dirhams.

While the EU and Troika or "institutions" have accepted the reforms listed--not surprising since they were developed through constant consultations--they have also demanded further elaboration of them. Christine Lagarde the manager of the International Monetary Fund(IMF) and Mario Draghi, the President of the European Central Bank expressed some reservations and objections to the list. The Eurogroup finance ministers in an official statement said: “We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close coordination with the institutions in order to allow for a speedy and successful conclusion of the review.”Greece is being presented with more and more hoops to jump through to receive further funds. In the end the Greek government may decide enough is enough and break free through an exit from the euro zone.

Germany rejects Greek loan extension proposals sabotaging a deal for now

Moments after the European Commission had called the Greek proposals "positive" Germany rejected the proposal. Greece was requesting a six-month extension of its loan program. The complete text of the letter sent to the Eurogroup finance ministers can be found here. A spokesperson for the German finance ministry complained that the Greek proposals were attempting to obtain "bridge financing, without meeting the requirements of the programme. The letter does not meet the criteria agreed upon in the Eurogroup on Monday." The spokesperson also said that the suggestions were "not a substantial proposal for a solution". In the BBC article, at least, the spokesperson does not say exactly why the proposal is not a substantial proposal for a solution nor how exactly the proposals fail to meet the requirements of the program.

Syriza has caved on almost every demand including the demand that there be a new agreement and not an extension of the original agreement. The Greek proposals show Syriza has caved on debt reduction and in effect accepted the bailout terms:"The Greek authorities honour Greece's financial obligations to all its creditors as well as state our intention to cooperate with our partners in order to avert technical impediments in the context of the Master Facility Agreement which we recognise as binding vis-a-vis its financial and procedural content."

 As this Wall Street Journal article explains Greek officials think that they can sign on to an extension of the terms of the loan agreement under the Master Financial Assistance Facility Agreement (MFAFA) without signing on to the bailout austerity conditions in the MoU or original memorandum of agreement. There is only one problem with that position and that is that getting a loan under the MFAFA is part and parcel of the MoU. You cannot get a loan without signing on to the austerity conditions of the MoU. "The availability and the provision of Financial Assistance under this Agreement... shall be conditional upon (i) the Beneficiary Member State’s compliance with the measures set out in the MoU and (ii) the Guarantors deciding favourably, on the basis of the findings of the regular assessments carried out by the Commission in liaison with the ECB ... that the economic policy of the Beneficiary Member State accords with the adjustment programme and with the conditions laid down by the Council in the Decision and any other conditions laid down by the Council or in the MoU. " I have omitted some of the legalese in this quote. For the entire quote in its original form see the article.

Another section of the Greek proposals accepts the supervision of the Troika without using that term:" f) To agree on supervision under the EU and ECB framework and, in the same spirit, with the International Monetary Fund for the duration of the extended Agreement. " So Syriza will not negotiate with the Troika but agrees to their supervision.

Some of the proposals do suggest that the Greek government should reverse some of the austerity measures: "The Greek government expresses its determination to cooperate closely with the European Union's institutions and with the International Monetary Fund in order: (a) to attain fiscal and financial stability and (b) to enable the Greek government to introduce the substantive, far-reaching reforms that are needed to restore the living standards of millions of Greek citizens through sustainable economic growth, gainful employment and social cohesion. " Some of the reforms mentioned in b) would no doubt be inconsistent with present austerity policies tied to the bailout program.

 Mark Lowen of the BBC suggests that there is a rift at the highest level between authorities in Brussels and Berlin. European Commission president Jean-Claude Juncker took the Greek proposals as a positive sign that could pave the way for a reasonable compromise. Any vote on the Greek proposals must be unanimous so Germany can determine the outcome. A Greek government source said after the German rejection of its proposals: "Tomorrow's Eurogroup has just two choices. To accept or reject the Greek request. We will now discover who wants to find a solution, and who does not". Perhaps Germany wants Greece to  exit the euro zone and get rid of what it no doubt considers a trouble maker with uncivilized official who do not wear ties.