I believe the answer is the Greek primary account surplus vanished, making it impossible to honor all commitments made.
Simply put, Greece had to choose between staying on the euro and honoring the other campaign promises.
Greece Attacks Tax Evasion
On Monday, Greece will submit its reform plan to eurozone officials. At the heart of the deal, Reforms Will 'Combat Tax Evasion'.
Greece will crack down on tax evasion and streamline its civil service in its bid to secure a bailout extension, minister of state Nikos Pappas says.Illusion Shattered
The government is working on a package of reforms that it must submit to international creditors on Monday. If the reforms are approved, Greece will be granted a vital four-month extension on its debt repayments.
Mr Pappas said the reforms being proposed would take the Greek economy "out of sedation". "We are compiling a list of measures to make the Greek civil service more effective and to combat tax evasion," he told Greece's Mega Channel.
Streamlining civil services will reduce expenses, but it's hardly what the leftist government promised. Combating tax invasion was a campaign promise, so make it two campaign promises kept for those keeping an official score.
Nonetheless, those expecting Tsipras to immediately honor all pledges, just had their illusion shattered.
Reuters reports Greece Readies Reform Promises.
Top Marxist members of Tsipras's Syriza party, a broad coalition of the left, have so far been silent on the painful compromises made to win agreement from the Eurogroup.Troika by Any Other Name Smells Just as Bad
But veteran leftist Manolis Glezos attacked the failure to fulfill campaign promises. "I apologize to the Greek people because I took part in this illusion," he wrote in a blog. "Syriza's friends and supporters ... should decide if they accept this situation."
Glezos, a Syriza member of the European Parliament, is not a party heavyweight. But he commands moral authority: as a young man under the World War Two occupation, he scaled the Acropolis to rip down a Nazi flag under the noses of German guards and hoist the Greek flag, making him a national hero.
A government official said Glezos "may not be well informed on the tough and laborious negotiation which is continuing".
The opposition pounced on the climbdown from promises that have raised huge expectations among Greeks. "No propaganda mechanism or pirouette can hide the simple fact that they lied to citizens and sold illusions," said Evangelos Venizelos, leader of the socialist PASOK party.
Friday's agreement merely buys time for Greece to seek a long-term deal with the Eurogroup. Euro zone members Ireland and Portugal have already exited their bailouts, but Greece faces yet another program - on top of bailouts in 2010 and 2011 totaling 240 billion euros - when the extension expires.
"Once you get them into the safe space for the next four months, there'll be another set of discussions which will effectively involve the negotiation of a third program for Greece," Irish Finance Minister Michael Noonan said on Saturday.
Six days ago in Greek Negotiations and Philosophical Questions I asked Does "Troika" by any other name stink as bad?
My answer was "Beauty is in the nose of the beholder. But logically, the answer is yes."
Keep Talking Greece has some interesting Excerpts from a Statement Made by Glezos.
“Renaming the Troika into Institutions, the Memorandum of Understanding into Agreement, and the lenders into partners, you do not change the previous situations as in the case renaming meat into fish.Third Bailout Coming
The people voted in favor of what SYRIZA promised: to remove the austerity which is not the only strategy of the oligarchic Germany and the other EU countries, but also the strategy of the Greek oligarchy.
Some argue that to reach an agreement, you have to retreat. First: there can be no compromise between oppressor and oppressed. Between the slave and the occupier is the only solution is Freedom.
But even if we accept this absurdity, the concessions already made by the previous pro-austerity governments in terms of unemployment, austerity, poverty, suicides have gone beyond the limits.”
On February 11, I discussed the need for a third bailout in Third Greek Bailout? Another €53.8 Billion Needed? Primary Account Surplus Revisited.
That explains the comment made by Irish Finance Minister Michael Noonan yesterday. "Once you get them into the safe space for the next four months, there'll be another set of discussions which will effectively involve the negotiation of a third program for Greece."
"Won a Battle, Not the War"
Will Tspiras finally draw a line in the sand or will he accept another €53.8 Billion crammed down his throat?
I think so. But before he can do so, Greece needs to have a solid primary account surplus. That explains why the heart of his reform program involves a crackdown on "tax evasion" and cutting civil service.
To default on the Troika and stay in the eurozone, Greece must have a primary account surplus. Tsipras has a four month window to achieve that.
War Postponed Four Months
In context, the battle was to stay on the euro. The war was postponed for four months. In the interim, Tsipras needs to keep his coalition intact.
Once again, I do not care for the leftist policies of Syriza. But the citizens of Greece have suffered enough and are better off defaulting as soon as they can. That requires a primary account surplus.
On Friday German finance minister Wolfgang Schäuble rubbed Greek capitulation in Tsipras' face with his comment "The Greeks certainly will have a difficult time to explain the deal to their voters. As long as the programme isn’t successfully completed, there will be no payout."
Let's see what happens four months from now.
With roles reversed and Schäuble playing the witch, I envision Tsipras' silently saying "All in good time my little pretty, in good time".
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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