The troika is back

THE scene is familiar: burly Greek bodyguards hustle a trio of foreign bureaucrats into the finance ministry through a side entrance to avoid a cluster of anti-austerity protesters shouting “troika go home”. Hours later tight-lipped representatives of the troika—the European Commission, IMF and European Central Bank (ECB)—head back to their hotel while ministry officials spin their version of the talks: heroic Greek resistance to “excessive” demands made by the country’s international creditors.

After almost six months of talks the stand-off is still unresolved. Greece has implemented only about half the measures it signed up to last summer, say European Union (EU) officials. The troika returned to Athens on February 24th, intending to reach a deal that could be approved at a meeting of the euro-zone finance ministers on March 10th. That would unlock another sizeable tranche of bail-out funding, enabling Greece to repay €9.3 billion ($12.8 billion) of bonds maturing in May, and start planning a return to international financial markets with a modest bond issue later this year.

Disputes over liberalising the market for fresh milk and allowing supermarkets to sell non-prescription drugs underline how the fragile coalition government led by Antonis Samaras, the centre-right prime minister, is held hostage by interest groups. Other disagreements grab fewer headlines but could do more harm to Greece’s chances of an economic turnaround this year. According to the central bank, stress tests on four big Greek lenders showed they will need about €6 billion in fresh capital to stay solvent. But the IMF has come up with a mind-boggling €20 billion estimate for recapitalising the banks, implying that Greece will be unable to avoid a third international bail-out. (The ECB will perform its own stress tests later this year.)

Yet the outlook is not all gloomy. The country’s recession slowed last year, with the economy shrinking by 3.7% compared with the troika’s forecast of 4%. Finance ministry officials seem confident that Eurostat, the European Commission’s statistical arm, will confirm an unprecedented primary budget surplus (before interest payments) of €1.5 billion in 2013.

Another record year for tourism is forecast, driven by a recovery in the EU and more bookings from Russian and Chinese visitors. After months of tough negotiations with the Greek state gas utility, Russia’s Gazprom has agreed to cut natural-gas prices by around 15%, backdated to last July. This should result in price cuts of around 12% for hard-pressed Greek consumers.

Mr Samaras still holds a lead as “most suitable prime minister” over Alexis Tsipras, the radical opposition leader, according to opinion polls. Yet his New Democracy party consistently lags a few points behind the Syriza party under Mr Tsipras. The centre-right has lost voters to Golden Dawn, a neo-Nazi party, whose leaders are in jail accused of running a criminal gang. At the same time, Syriza is attracting a steady stream of former supporters of the PanHellenic Socialist Movement, the junior partner in the governing coalition.

Elections in May for the European Parliament, regional governors and local mayors will show how popular Mr Tsipras is with voters. Syriza officials are already eyeing the presidential vote next March, when Mr Tsipras may have a chance to trigger a general election if parliament fails to elect a new president to replace Karolos Papoulias. With the governing coalition almost 30 votes short of the required three-fifths majority, Syriza’s moment may come at that point.