there has still be no agreement, it seems that we are again looking
at something like the situation that we saw in February.
Tsipras talks about "red lines", makes brave speeches in
the Greek parliament about the creditors "pillaging Greece",
flirts with Moscow - and then backs down.
doubt as we saw after the last climbdown in February a host of
economists and commentators sympathetic to Tsipras and Syriza are
going to tell us that there was no climbdown and that Tsipras has not
crossed his "red lines" - saying so on the basis of various
technical points in the proposals.
am afraid based on reports I am reading there is no doubt he has. He
said - or gave the impression - that further pension cuts were out of
the question. He is now offering cuts in pension entitlements
amounting to 0.4% of GDP this year and 1% of GDP next year. However
you spin it, that is a clear crossing of what he gave people in
Greece to think were his immoveable "red lines"
this is less than what the IMF-EU were demanding, it is not
significantly so and again, as was the case last February, I can't
but think that more conciliatory diplomacy would have achieved the
same result without all the anger and trouble.
am starting to think that this is going to be the recurring pattern
with Tsipras. He knows how to talk the talk, but he can't bring
himself to walk the walk.
he is not prepared to face a Grexit, which means the IMF-EU have him
over a barrel.
is predictably some mumbled talk from Merkel that in return for
backing down Tsipras might get at some unspecified future time the
promise of a possible debt write-off. With Schauble and most of the
other Eurozone finance ministers implacably opposed to the idea, I
wouldn't count on it. As it happens the same promise was made before
to Samaras and it was never honoured. Besides how big would such a
If it is merely a token amount then it is not worth
would be wrong to say that I welcome a Grexit. I am fully conscious
of the appalling effects at least in the short term.
However a Grexit
would at least offer some hope of an end to this never-ending drama.
It looks like my hopes that we might at last be there were premature.
Assuming - as must now be likely - that some sort of deal is done in
the next few days to tide Greece over the next few months, it looks
like we must all prepare ourselves for the next instalment of this
ghastly farce some time in the autumn.
Capitulates: Tsipras Crosses "Red Line", Will Accept
long said that negotiations between Greece and its creditors are more
a matter of politics than they are a matter of economics or finance.
the troika’s perspective, breaking Greece and forcing PM Alexis
Tsipras to concede to pension cuts and a VAT hike is paramount, and
not necessarily because anyone believes these measures will put the
perpetually indebted periphery country on a sustainable fiscal path,
but because of the message such concessions would send to Syriza
sympathizers in Spain and Portugal. In short, the troika cannot set a
precedent of allowing debtor nations to obtain austerity concessions
by threatening to expose the euro as dissoluble.
the Greek side of the table, Tsipras must convince Syriza party
hardliners that concessions are preferable to Grexit and the economic
malaise that would come with redenomination. For some on the Left
Platform, compromising the party’s electoral mandate is simply not
an option and it’s these lawmakers (who just two weeks ago voted to
leave the euro and default) that Tsipras will need to sway or else
attempt to push an unpopular agreement through parliament a gambit
which implicitly assumes that the ensuing political upheaval and
voter backlash is preferable to economic collapse. The problem with
the latter approach is that it effectively means the troika will have
succeeded in using financial leverage to subvert the democratic
process, an eventuality that die hard Syriza hardliners are in no
mood to suffer.
one final attempt to table a proposal that retains some semblance of
Tsipras' defiant posturing, it appears he may have finally broken
after a meeting with ECB chief Mario Draghi where is sounds as though
the central bank warned the PM that without concessions, ELA to Greek
banks would be cut off and that, of course, would mean game over as
Greeks would take to the streets en masse.
Central Bank President Mario Draghi told Greek Prime Minister Alexis
Tsipras in meeting on Monday in Brussels that the ECB will help
secure the country’s banking system as long Greece is in an aid
program, Greek government official tells reporters on the
condition of anonymity.
shortly thereafter (via AFP):
has accepted the principle of extending its current bailout
programme which expires at the end of the month so as to keep it
afloat while a long-term debt solution is worked out, Greek
government sources said Monday.
the first time, we accept the extension of the programme as the only
way forward," one source said as eurozone leaders discussed
Greece's future in the single currency ahead of the June 30 end of
its current aid programme.
so, we turn to politics or, more appropriately, Greek politics
because the fate of Greece now looks to rest in the hands of Syriza's
far left factions. Dow Jones has more:
avert a default and possible exit from the eurozone, Greek Prime
Minister Alexis Tsipras must sell Germany'schancellor, Angela
Merkel, on his plan to fix Greece's finances.
he needs to persuade Vassilis Chatzilamprou.
out at the Resistance Festival, an annual gathering of Greece's far
left, the lawmaker from Mr. Tsipras's left- wing Syriza party said he
was in no mood for submission.
cannot accept strict, recessionary measures," Mr. Chatzilamprou
warned. It was after midnight Sunday, and the weekend festival was
winding down. "People have now reached their limits."
isn't a traditional party but a coalition of left-wing groups with an
intricate family tree formed out of doctrinal splinters and
squabbles. It is those many, disparate factions that Mr. Tsipras must
also satisfy with any potential bailout agreement with Greece's
Chatzilamprou, for instance, is a member of the Communist
Organization of Greece, which is an outgrowth of the Organization of
Marxist-Leninists of Greece. It is distinct from the Communist
Tendency, which has a Trotskyite bent. (Neither should be confused
with the Communist Party of Greece, which is outside Syrzia.)
unusual composition has made it especially hard for Mr. Tspiras to
strike a deal with eurozone and International Monetary Fund
officials. "The people who are responsible for the negotiation
move within a frame that is determined by the central committee of
the party," says Alekos Kalyvis, a longtime union official who
is on the committee and responsible for its economic-policy
negotiators have some latitude to make decisions, he said, "but
this shouldn't be interpreted as if they have a blank check from the
party--neither them nor Tspiras."
of Syriza's factions regard the party's rise as a epochal moment for
the left--and any compromise on a bailout as a deep betrayal of its
Leoutsakos, another Syriza member of Parliament, said Germany and the
other creditor countries are determined to defeat Syriza. "In
my opinion, their aim is to humiliate the Greek government," he
says. "They want the message that no other politics are accepted
in the eurozone."
is also uncertain exactly what kind of deal would be acceptable to
the left wing of Syriza. The party's argument that fiscal
austerity--steep budget cuts and tax increases--has deepened Greece's
economic slump has been central to its popular success.
on the party's left wing reject any additional pension and wage cuts
outright, saying Greek workers have suffered enough in years of
depression since Greece's first bailout.
Leoutsakos, like others on the far left, also insist that at least
some of Greece's debt must be forgiven. "In order to service it,
we'd need to execute the Greek people," he said. "And
nobody in Syriza is willing to do it."
is also the question of Mr. Tsipras's future as prime minister if he
does compromise. No one here is unaware of the fates of former Greek
premiers George Papandreou and Antonis Samaras. Both signed bailout
agreements with Europe.
lost their jobs, and Mr. Papandreou's party has been all but
back on his leftist principals "would be political suicide for
Tsipras," Mr. Chatzilamprou said. "It would mean he is also
recyclable: They could replace him with someone else."
DB has more color on the political fight Tsipras faces in the coming
to further progress this week, focus is likely to shift very quickly
to the Greek domestic political front. Disbursements for Greece
ahead of the IMF tranche due at the end of the month will require
domestic parliamentary approval. It is likely that the Greek PM would
first attempt to obtain approval from the SYRIZA party's 200-strong
Central Committee before bringing an agreement to parliament. In the
event of failure at the party level, a referendum would likely be
called. In the event of party approval, a vote would be likely taken
to the parliamentary floor. Depending on the process adopted, such a
vote may take between 2 days to a week.
will remain a major challenge for the Greek PM to successfully pass a
potential agreement through parliament. Local press reports that
10-40 SYRIZA MPs are likely to dissent (the government has an 11 MP
majority), while overnight the Independent Greeks junior coalition
partner (12 MPs) has also raised the possibility of withdrawing from
government. How the political process plays out largely depends
on the number of MPs the current government loses. A loss of less
than thirty parliamentarians may force a change in coalition to
include the two small moderate parties in parliament (PASOK and the
River) jointly controlling 30 MPs. More substantial losses requiring
the support of major opposition party New Democracy would open up the
possibility of broader changes to the government or a referendum.
close with what we said last week about the tough choice the PM
faces: "Tsipras must decide how he wants history to
remember his tenure as Prime Minister. Either he will be the leader
who allowed Greece to crash out of the euro on its way to a
redomination-driven economic collapse, or he will go down as the
fiery advocate for change who caved under pressure and allowed the
troika to stamp out democracy in the place where it was born."
because this is Europe after all, someone had to deny the "rumors":
SAYS THERE WAS NO DISCUSSION OF EXTENSION SCENARIOS ON GREEK BAILOUT
have gathered in front of the Greek Parliament in support of Athens’s
place in the eurozone, calling for a debt agreement to be reached as
EU leaders and international creditors race against time to avert the
country’s looming default.