Drachma Revolt Brewing In Athens

Drachma revolt adds unease to Greece's awkward alliance

Prime Minister Alexis Tsipras' power-sharing acrobatics look harder to perform by the day.

Opposition parties are propping up his left-wing government long enough to negotiate a new bailout and keep the country in the eurozone, while senior members of his own party, SYRIZA, have revived a campaign to bring back the drachma.

On Thursday, lead bailout negotiators are due in Athens. They will intensify a new round of talks for a massive third rescue package after Athens and lenders from other eurozone countries reached a bitterly fought compromise.

But Tsipras has a more pressing priority. He will be battling to keep control of Syriza at a meeting of the party's 200-member executive, facing dissenters who argue the Left has abandoned its principles over the past six months under the country's popular prime minister.

 In a vote three weeks ago, Tsipras effectively lost his majority in parliament, when nearly one-fourth of SYRIZA’s lawmakers refused to back new austerity measures. Pro-European Union opposition parties were left to save the bill.

Since then, far-left dissenters have grown more defiant.

 Panagiotis Lafazanis, recently fired as energy minister in a reshuffle, called on the government and country to prepare for a national currency.

“An exit from the euro ... in spite of all the dark propaganda, would in no way be a disaster,” he told cheering supporters packed into an Athens theater this week, celebrating five years since the launch of his political website “Iskra” -  a name inspired by the Bolshevik underground newspaper once run by Vladimir Lenin.

My view:

The Greek drama is far from over.  A split in SYRIZA could pave the wave for a Euro exit and return to the Drachma.  To date, the markets have heavily discounted this option.

Over the weekend as more developments occur, we could see a trigger for a rush to safe haven assets such as gold and US bonds.