No
walls to save eurozone from ‘Greece amputation’ domino effect –
Varoufakis
RT,
20
April, 2015
Those
in the EU who want Greece to leave the eurozone are playing with
fire, country’s Finance Minister said, claiming that no “fence”
could possibly exist that would protect the union from a domino
effect should Greece or any other member leave.
“Anyone
who toys with the idea of cutting off bits of the eurozone, hoping
the rest will survive is playing with fire,”
Yanis Varoufakis told La Sexta, a Spanish TV channel. In an
interview, recorded 10 days ago but broadcast on Sunday, Varoufakis
warned that those in the EU who think they have been “ring-fenced”
from the Greek struggle are mistaken.
“Some
claim that the rest of Europe has been ring-fenced from Greece and
that the ECB has tools at its disposal to amputate Greece, if need
be, cauterize the wound and allow the rest of eurozone to carry on,”
Varoufakis said. “I very much doubt that that is the
case. Not just because of Greece but for any part of the union.”
The
fear factor in terms of a potential domino effect throughout Europe
will be impossible to ignore if Athens is pushed to a point where it
will have to consider exiting the eurozone. A default in Greece would
have a ripple effect on the European economy, as Greece’s debt is
tied to the European Central Bank, and shares a currency with 18
other eurozone members.
“Once the idea enters peoples’ minds that monetary union is not forever, speculation begins ... who’s next? That question is the solvent of any monetary union. Sooner or later it’s going to start raising interest rates, political tensions, capital flight,” Varoufakis warned.
French
Finance Minister Michel Sapin claimed last week that the union can
survive without Greece.
“If
something damaging happens, it will be for Greece that it will be
serious, for the Greek people, not for the other countries of the
eurozone. We’re not at all in the same situation that we were in
four or five years ago,”
Sapin told reporters Saturday.
Over
the years, Sapin said, EU economies grew to protect their banking
system, to “build
walls,”
and to offer protection to those in the union if Greek exit ever
happens. The French FM also called on Athens to abide by treaties and
agreements signed.
In
February, Greece’s creditors agreed to temporarily extend the
bailout program until June while Athens is preparing an economic
reform plan that the new government hope would finally set the
country on a course of economic growth. A framework deal between
Greece and its EU creditors is due on April 24.
Despite expressing clear intentions of averting default and remaining in the eurozone, Greece is struggling to keep its head above water and borrow money for regular repayments to its creditors. EU creditors want more reforms from Greece to get more funding. Greeks, instead of austerity policies, want to focus on stimulus schemes needed to recover economic growth.
“The
Greek government has presented a realistic reform plan that doesn’t
contain recessionary measures or burden the weaker layers of society,
yet gives the economy breathing space,”
Syriza party spokeswoman Rania Svigou said Sunday, Bloomberg reports.
“The government
will exhaust all possibilities for a solution that respects the
mandate of the Greek people.”
Despite
Urges And Threats, Greece Remains Defiant, Won't "Budge On Red
Lines" Even As Russia Denies Gas Deal
19
April, 2015
Hopes
ran high among Europe's unelected bureaucratic oligarchy and the
Troika of official creditors that the Greek government, after the ECB
openly dropped hints of a Greek IOU currency in the immediate future,
would finally relent over the weekend and admit that all of its
promises to its voters were a lie and that the Tsipras government
would finally pick up where the Samaras government left (and was
booted) off. There was even a perfect venue: Washington D.C., where
Varoufakis and Obama met for the first time just
hours before.
The
hopes were promptly dashed after Greece, once again, said it would
not "renege
on election pledges to end austerity measures as creditors pressed
for a compromise."
The
full court assault against Greece from all sides came fase and
furious.
As Bloomberg
notes,
both president Obama and ECB president Mario Draghi called on the
Greek government to do more to resolve the standoff amid depleting
cash reserves.
And
for the first time, a voice formerly quite sympathetic to the Greek
cause, that of France, expressed increasing frustration with the pace
of negotiations and openly chided Greece.
This
happened when French Finance Minister Michel Sapin spoke after the
IMF meeting in Brussels yesterday saying he "doesn’t expect a
resolution of Greece’s financing issues to be achieved in coming
days, including at a meeting of European finance ministers in Riga
April 24 and 25."
“We’re
in the same situation at the end of these meetings as at the
beginning. That’s in part because Greece wasn’t on the menu,"
Sapin said. "A lot of time has been lost and it won’t be
recovered" he dded.
Ironically,
the French government is now openly criticizing the Greeks, saying
the "need to work work work and work seriously” on their
economic plans "out of respect for the Greek
people." Ironic, because
it is "out of respect" for the people's choice to end the
Troika's meddling in Greece that Europe is in the current dead-end.
Let's
not forget that this is the same French government that itself missed
its budget deficit target two months ago and
avoided a EU deficit penalty just because in Europe some are more
equal than others.
The
irony continued: "Greece needs to respect the rules that apply
to all countries in the euro".... except France? "Greece
hasn’t only signed memorandums, but has signed treaties."
The
criticisms escalated into threats when ECB Governing Council member
Vitas Vasiliauskas said that "the situation in Greece means that
we should have a limit until summer” for providing Emergency
Liquidity Assistance for Greece. He added that "everyone
understands what ELA means, it’s a temporary measure to give the
banks liquidity. We
will have to have discussions about the issue liquidity provision
versus monetary financing. We will certainly have these discussions
before summer."
Once
again a case of some being more equal than others, because all the
ECB's QE really is, is monetary financing of insolvent peripheral
nations courtesy of an ECB backstop which makes rates so low Spain
and Italy can both go on a borrowing spree, and even issue 100 year
paper, and everyone will line up simply because the ECB has blessed
said paper. For now.
However,
when it comes to Greece and suddenly the ECB is very concerned about
"monetary financing."
Finally,
the big guns came out when Mario Draghi himself said the euro area
was better equipped than it had been in the past to deal with a new
Greek crisis but warned
of "uncharted waters" if
the situation were to deteriorate badly. As the FT reported, Draghi
"called for the resumption of detailed discussions aimed at
resolving the country’s debt woes and urged
the Greek authorities to bring forward proposals that ensured
fairness, growth, fiscal stability, financial stability."
Said
otherwise, to do precisely as the Troika demands.
Greek
officials, including Deputy Prime Minister Yannis Dragasakis, stood
their ground.
“We
want a viable solution within the euro,” Dragasakis said in an
interview published Sunday in Athens-based To Vima newspaper. Still,
“we
don’t budge from our red lines.”
The
Greek "red lines" are refusing to cut wages and pensions,
introduce new taxes or sell state assets, Alternate Health and Social
Security Minister Dimitris Stratoulis said in an interview Saturday
with Athens-based Skai TV. “The
Syriza-led government will carry out the reforms the Greek people
need, not ones requested by our creditors,” he
said. The country won’t be pressured “by euro-exit threats,” he dded.
And
then Greece brought out the tactical weapons: "Snap
elections or a referendum are possible options should negotiations
with creditors stall, Dragasakis said."
Which
goes to the heart of the problem, because while the Greek population
wants an end to austerity (hence the election of Syriza), it also
wants to remain in the Eurozone and keep the Euro. As such a
referendum and snap elections would finally push the decision away
from the government and give it to the general population, something
the eurocrats, who pride themselves in their "technocracy"
are terrified of, and would never forgive.
Meanwhile,
Greece may have no money left but it still has pride: "Greece
won’t agree to any privatization, Energy Minister Panagiotis
Lafazanis said in an interview published Sunday in Athens-based Real
News newspaper. While
“so-called” partners, including unidentified International
Monetary Fund officials, want to “blackmail” the
Greek government into adopting measures that would hurt the working
class, “we won’t betray the people’s mandate,” he said.
While
on the surface Greek defiance is inexplicable having run out of all
negotiating chips, the news yesterday that none other than Vladimir
Putin may be coming to the Greek rescue with a €5 billion advance
gas pipeline payment may have given the Greeks a sense of leverage.
That,
however, was promptly dashed subsequently when Russia denied the
Spiegel report. Reuters
cited Kremlin spokesman Dmitry
Peskov, who in comments made to Business FM radio and quoted by RIA
news agency, said "No,
there wasn't (any agreement)."
Peskov
reiterated that the Greeks had not requested financial assistance
during talks in the Kremlin earlier this month between Prime Minister
Alexis Tsipras and Russian President Vladimir Putin.
"Naturally
the question of energy cooperation was raised. Naturally ... it was
agreed that at the expert level there would be a working-out of all
issues connected with cooperation in the energy sphere, but Russia
did not promise financial help because no one asked for it,"
Peskov was quoted as saying.
Of
course, this is merely diplomatic double talk, and all it suggests is
that Russia is awaiting the official admission from Greece that it
will pivot to Russia. For that to happen, Greece will have to
formally state that in addition to creditor negotiations it is now
openly looking to Moscow (and Beijing) for additional aid. The
problem is that such a statement would promptly end any hopes of a
Greek deal with its Troika creditors.
As
such Greece is simply trying to delay making the choice of picking
its future path, be it west or east, until the very last moment.
However, since Greek liquidity is now non-existent and the government
has almost run out of public funds to pillage, Tsipras will have no
choice but to make that choice in the coming days.
It will be a very interesting unraveling followed by the next European war.
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