GREECE IN CRISIS - THREAT OF A COUP?
I have been having fraught conversations with people in Greece.
Before discussing where we are going, let us be clear about why we are here.
Last Monday the Greek government came up with proposals that would have amounted to an extension of austerity.
On Wednesday the IMF-EU rejected the proposals. What they proposed in their place was a package of tax increases and spending cuts that in essence put the situation exactly back to the original bailout conditions, which Syriza was elected to reject in January.
In other words 6 months of negotiations have got precisely nowhere and despite their protestations to the contrary the IMF-EU have scarcely budged.
To add insult to injury, we have the typical ploy of the IMF-EU claiming their "generous" counter-proposals made on Thursday offered Greece $15 billion of extra money. As is a recurring pattern with promises of money from the EU (something the Ukraine is also discovering), it turned out that this money is simply a re offer of money that was in the original bailout package - in other words it was not new money at all.
Meanwhile the IMF-EU seems to have disagreed with itself on the separate issues of the intended size of Greece's primary budget surplus and on the issue of a debt write off.
Basically the IMF was inflexible in its demands for a primary budget surplus but wanted a debt write-off, whilst the EU - or to be more precise the Germans (the Commission was more flexible) - was prepared to give ground on the size of the budget surplus but categorically ruled out a debt write-off.
Predictably the two positions cancelled each other out so that the proposal made to Greece made no concessions on either the budget surplus or the debt write-off.
Lost in any of this is the slightest recognition on the part of the IMF-EU of the utter failure of what they have done.
A programme that was supposed to stabilise the Greek economy has resulted in GDP falling by a quarter (a third if the starting point is the debt-inflated high point of 2007) and the country's GDP to debt ratio rising to a completely unsustainable 180%.
In place of any admission of the disastrous failure of the policy - blindingly obvious though that is - we get instead more demands for more of the same - one of the best case studies of Einstein's famous definition of insanity that I can think of.
Not surprisingly Tsipras rejected the counter offer and called a referendum.
Some claim to see in this a cunning plan. My view is that Tsipras had no choice.
He had already severely damaged his political credibility by making on Monday the concessions he did. He would not have survived as Prime Minister if he had accepted the counter-offer made on Thursday. Not only would he have faced a parliamentary revolt that would have ousted him from his position as Prime Minister but Syriza would have split and we would be looking today at a very serious political and governmental crisis with no obvious solution, which would have gone on for weeks with the certainty of a default in the meantime.
As for the decision to call a referendum, far from it being wrong or misguided, it was the only logical thing to do - other than resign - given the situation Tsipras finds himself in.
Since he is not able to do what he was elected to do - end austerity whilst keeping Greece within the euro - he has no option but to seek a mandate from the Greek electorate before he decides finally either to accept or reject the offer.
The alternatives would have been (1) to resign and call new elections - which would protract the situation by weeks - weeks Greece does not have (2) to accept the offer the effect of which I discussed above or (3) to reject the offer in which case we would be facing exactly the same situation of withdrawal of ECB assistance and capital controls we are seeing now.
At least by calling the referendum Tsipras is giving himself some sort of electoral mandate to get through the difficult days that now lie head.
As for the IMF-EU, IMF and EU officials who hide behind the calling of the referendum to justify what is happening are not being truthful. The only thing that would have prevented the ECB cutting back assistance and which might have prevented the imposition of capital controls today would have been Tsipras's unconditional and total capitulation to the demands made to him on Thursday. I suspect that the IMF and EU officials - with their complete lack of understanding of the situation in Greece - were confident he would capitulate and are flabbergasted and furious that he didn't
I am afraid that in this very unhappy and dangerous situation that we are looking at, it is impossible in a country like Greece to discount completely the possibility of a coup.
One particularly alarming development was a meeting that has just taken place between the Greek President and Antonis Samaras - the conservative leader and Prime Minister who was voted out in January. An announcement that appeared after the meeting said that they both agreed that Greece should remain at the heart of Europe and in the euro.
On the face of it that looks like a political intervention by the Presidency, which is a most worrying development.
I am not predicting a coup. I am not familiar enough any longer with the situation in Greece to assess the possibilities of one happening with any degree of accuracy.
A year ago I would have said a coup is out of the question. Unfortunately given Greece's history I don't think the risk of a coup can be completely discounted especially if the Presidency is used to give it an appearance of legality. Given the mood in Athens tonight I am afraid there are a quite a few people who would support it. So I am afraid would the IMF-EU.
For my part I have made some harsh criticisms of Tsipras and Syriza in my time.
The point has come to put those all aside.
Tsipras and Syriza are not ultimately responsible for this disaster. The IMF-EU - who so fanatically insist on continuing a disastrous policy - are.
Given the situation we are now in, Tsipras and Syriza deserve all the support they can get. They will need it over the next few days.
Hyperbole from Britain’s tabloid press? Not if the forecast is accurate
Eastring vs. Balkan Stream: The Battle For Greece
28 June, 2015
Russia wasn’t bluffing when it said that Turkish Stream would be the only route for Ukrainian-diverted gas shipments after 2019 , and after dillydallying in disbelief for over six critical months, the EU has only now come to its senses and is desperately trying to market a geopolitical alternative. Understanding that its need for gas must absolutely continue to be met by Russia for the foreseeable decades (regardless of trans-Atlantic rhetoric), the EU wants to mitigate the multipolar consequences of Russia’s pipeline plans as much as it feasibly can. Russia wants to extend the Turkish Stream through Greece, Macedonia, and Serbia, in a project that the author has previously labelled as “ Balkan Stream ”, while the EU wants to scrap the Central Balkan route and replace it with one along the Eastern Balkans via Bulgaria and Romania, the so-called “Eastring” line.
I Fear The Greeks, Even When They Bring Gifts
Raúl Ilargi Meijer
28 June, 2015
Just another normal morning at the Automatic Earth. Shaking off the local drink – when in Rome.. – and perusing a thousand views and pieces, many on the inevitable topic of ‘Da Referendum’. And I got to say, I can’t even tell whether it’s just me, but there is this huge divide between what a simple vote can and should be, and how it is perceived and presented.
Economists with PhDs and hedge-fund traders can barely stay on top of the vagaries of Greece’s spiraling debt crisis. Now, try getting grandma to vote on it. That’s what Prime Minister Alexis Tsipras is doing by calling a snap referendum for July 5 on the latest bailout package from creditors.
The 68-word ballot question namechecks four international institutions and asks voters for their opinion on two highly technical documents that weren’t made public before the referendum call and were only translated into Greek on Saturday. Worse, they may no longer be on the table. IMF chief Christine Lagarde told the BBC late on Saturday that “legally speaking, the referendum will relate to proposals and arrangements which are no longer valid.”
Tsipras’s decision means everyone from fishermen to taxi-drivers and factory workers will have to form an opinion on the package, with their country’s economic future hanging in the balance. A rejection of the bailout terms could lead to an exit from the euro area and economic calamity; accepting them would probably keep Greece in the euro, but with more austerity.
“Usually in democracies, it’s the technocrats and the politicians who take care of the details, while voters are asked about broader issues and principles,” said Philip Shaw, the chief economist in London at asset manager Investec. “This is a transfer of responsibility from parliament to the voters.”
Democracy deserved a boost in euro-related matters. We just delivered it. Let the people decide. (Funny how radical this concept sounds!)