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Greece PM leaves referendum option open, rules out elections

Greek Prime Minister Alexis Tsipras
Carsten Koal | Getty Images

Greek Prime Minister Alexis Tsipras on Tuesday said he would have to resort to a popular referendum if lenders insist on demands that the government deems unacceptable but was confident of striking a deal to avoid such a scenario.

Athens is weeks away from running out of cash, but talks with EU and IMF lenders on more aid have been deadlocked over reform measures including pension cuts and labour market liberalisation that Greece must implement. Speculation has grown that Tsipras could call elections or a referendum to break the impasse.

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In his first major television interview since being elected in January, Tsipras said he expected a deal with creditors by May 9, three days before a debt payment to the IMF of about 750 million euros ($815.5 million) falls due.

He ruled out a default but stressed that the government's priority was to pay wages and pensions.

Pressed on what the government's options were if no deal was found, Tsipras ruled out snap elections, saying it had only been a few months since the government had been voted in.

But he said the government did not have the right to accept demands from lenders that fell outside the limits of its mandate to end austerity cuts and would have to ask Greeks to decide.

"If the solution falls outside our mandate, I will not have the right to violate it, so the solution to which we will come to will have to be approved by the Greek people," Tsipras told Star television in the interview.

"But I am certain we will not reach that point. Despite the difficulties, the possibilities to win in the negotiations are large. We should not give in to panic moves. Whoever gets scared in this game loses."

Tsipras said Greece was in the final stretch of negotiations despite differences on key issues like labour reform, pension cuts and a proposed value-added tax hike on popular islands.

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He said he expected an initial deal on reforms this week or next and that asset sales would be part of the concessions offered, including two major items - the sale of Piraeus port and the lease of 14 regional airports.

He also said Greece was hoping for a 3 billion to 5 billion euro pre-payment of future profits if it struck a deal with Russia on the Turkish Stream pipeline project.

"Financial asphyxiation"

Some of his sharpest comments were reserved for the previous government and certain unnamed quarters in Europe, which he accused of laying a "trap" for his government when it took power in the hope of tripping it up.

"They derive pleasure from the prospect of a failure in the talks," he said, saying his government took over a "minefield" when it came to power in January.

"We received a country that was in a situation of financial asphyxiation."

He also hit out at the European Central Bank, calling its decision to place a cap on Treasury bill purchases by banks - which prevented banks from financing the government - a "politically and ethically unorthodox" decision.

In another jibe against European partners, he said his government made a mistake by accepting a verbal rather than written commitment that the ECB decision would be reversed once Greece got a deal to extend its bailout.

He offered praise for German Chancellor Angela Merkel - a frequent target of his criticism before he was elected - saying she was diligent and organized.

"She has the German culture of wanting - and I think this is good in our relationship - the other person to tell the truth, to not lie," he said. "And that's what I try to do; I don't lie."