Russia, Greece sign €2bn deal on Turkish Stream gas pipeline
RT,
19
June, 2015
Russia
and Greece have signed a deal to create a joint enterprise for
construction of the Turkish Stream pipeline across Greek territory,
Russian Energy Minister Aleksandr Novak said. The pipeline will have
a capacity of 47 billion cubic meters a year.
The
construction costs are about €2 billion and the parties will sign a
roadmap Friday, Novak told RIA at the St. Petersburg Economic
Forum.
The
Greek extension of the Turkish Stream project is called the South
European pipeline in the memorandum signed on Friday, Novak said,
adding that the construction will start in 2016 and be completed by
2019.
The
two countries will have equal shares in the company, Novak
said.Construction of the pipeline in Greece will be financed by
Russia, and Athens will return the money afterward.
The
Russian shareholder in the joint enterprise will be state-owned
Vnesheconombank (VEB), Novak said.
Greek
Energy Minister Panagiotis Lafazanis said the Friday meeting
was"historical".
"The
pipeline will connect not only Greece and Russia, but also the
peoples of Europe,” Lafazanis
was quoted as saying by Sputnik news agency. “Our
message is a message of stability and friendship... The pipeline we
are beginning today is not against anyone in Europe or anyone else,
it is a pipeline for peace, stability in the whole region."
The
1,100 kilometer Turkish Stream pipeline will have four lines and an
annual capacity of up to 63 billion cubic meters (bcm) of gas. About
16 bcm will be supplied to Turkey while the remaining 47 bcm will go
to a hub on the Greek - Turkish border to be transported onwards to
Europe.
In
December 2014, Russia cancelled the South Stream gas pipeline project
because the EU was constantly blocking the deal. South Stream would
have delivered 63 bcm of gas to Europe, bypassing the current routes
through unreliable Ukraine.
EU shouldn’t view itself as ‘hub of universe’ – Greek PM
Europe
shouldn’t view itself as a “hub of the universe” and it has to
understand that the center of world economic development is shifting
to other regions, said Greek Prime Minister Alexis Tsipras, speaking
at St. Petersburg International Economic Forum.
“The
world differs from what it was before. We in Europe had an illusion
for a long time of literally being a hub of the universe, as a center
of the world and continued to see and rely only on our direct
surroundings," he
said.
In
the meantime, Tsipras added the economic center of the planet “has
already shifted” as
new powers are playing a more and more “important
role on an economic and geopolitical level.”
International
relations are getting more and more multipolar, Tsipras said,
referring to the role of the G8, the G20, regional cooperation in
Asia and the BRICS partnership.
“The
Eurasian [Economic] Union is a new formation of regional integration
and is a potential example of new sources of wealth production,
benefits and new economic powers,” the
Greek PM said.
He
also said that the “vicious
circle“ of
western sanctions triggered by the Ukrainian crisis must end.
“The
crisis in Ukraine has opened a new wound in the heart of Europe, a
wound of instability,” Tsipras
said. “And
this is a very bad sign for international relations because instead
of prosperity and economic cooperation in the region, we see
processes leading to war, militarization, and sanctions.”
READ MORE: Greek journalists were 'coached' by IMF to report with pro-austerity bias – ex-envoy
The European Union “should find its way back to its statutory principles: solidarity, democracy [and] social justice," Tsipras said. "By sticking to policies of austerity, and policies which harm social cohesion, which aggravate the recession, this is impossible.”
"Bank Holiday" Preparations Begin In Greece, Lines Form At Athens ATMs
Deposit flight from Greece's ailing banking sector has been running north of €500 million per day this week as the threat of capital controls casts a pall over the Greek government's efforts to reassure the public and head off a terminal bank run.
Sparking
a panic has been the most powerful tool at the troika's disposal to
bring PM Alexis Tsipras to the negotiating table and force Syriza to
either concede to pension cuts and a VAT hike or risk social and
political upheaval in the face of dark ATMs and public protests - we
said this first in February and finally even the Greek government
realized just what game Europe is playing.
Until
now, Greeks had taken the barrage of headlines in stride with a stoic
fortitude that would impress Marcus Aurelius but now, it appears as
though the 'institutions' might have finally broken their spirits.
IMF Humiliates Greece, Repeats It Will Keep Funding Ukraine Even If It Defaults
One
week ago, we were stunned to learn just how low the political
organization that is the mostly US-taxpayer funded IMF has stooped
when, a day after its negotiators demonstratively stormed out of the
Greek negotiations with "creditors", Hermes'
ambassador-at-large Christone Lagarde said that the IMF "could
lend to Ukraine even if Ukraine determines it cannot service its
debt."
In
other words, as Greece struggles to avoid a default to the IMF on
debt which was incurred just so German banks can remain solvent and
dump trillions in non-performing loans to US hedge funds and Greek
exposure, and which would result in the collapse in the living
standards of an entire nation (only for a few years before an
Iceland-recovery takes place, one which Greece would already be
enjoying had it defaulted in 2010 as we said it should), and as the
"criminal" IMF does everything in its power to subjugate an
entire nation, or else let it founder, the IMF
told Soros' BFFs over in Kiev, that
no matter if they default to its private creditors (in fact please do
since Russia is among them), the IMF would keep the debt spigot
flowing.
Courtesy
of the US taxpayer of course.
Fast
forward one week when, with Greece one step closer to a full-blown
financial collapse, the IMF comes out and tell Ukraine - which
already passed a law allowing it to impose a debt moratorium at any
moment - not to worry, that even in a default it will keep providing
unlimited funds. From
Reuters:
Ukraine's efforts to strike a debt restructuring deal with its creditors will allow the International Monetary Fund to continue to support the country even if the talks are not successful, the head of the IMF said on Friday.
"I ... welcome the government's continued efforts to reach a collaborative agreement with all creditors," IMF Managing Director Christine Lagarde said in a statement. "This is important since this means that the Fund will be able to continue to support Ukraine through its Lending-into-Arrears Policy even in the event that a negotiated agreement with creditors in line with the program cannot be reached in a timely manner."
We
will pass comment on this latest grand IMF hypocrisy and ask if
Greece would rather be in Kiev's place which at the behest of
"Western" leaders, it sold, liquidated, and otherwise
"lost" all of its gold. Or, like Ukraine, Athens is willing
to part with its $4 billion in gold just to appease the Troika as
it sells
all of its 112.5 tons of official gold to
unknown buyers. A transaction which would buy Greece about 3-6 months
of can kicking and a few stray smiles from Chrstine Lagarde.
Inciting Bank Runs as a Negotiating Tactic
Raúl Ilargi Meijer
19
June, 2015
The
troika of Greek creditors has gone into full-frontal morals-be-damned
attack mode, handpicking arms from a weapons arsenal we haven’t
seen used before, and that we never should have seen in an
environment that insists – and prides – on presenting itself as a
union, both in name and in spirit. Now that they are being used,
there no longer is such a union other than in name, in empty words.
This
has turned into the kind of economic warfare one would expect to see
between sworn and lethal enemies, that the US would gladly use
against Russia for instance, but not between partners in a union
founded on principles based entirely and exclusively on being
mutually beneficial to everyone involved.
Those
principles, and everything that has been based on them, the common
currency, the surrender of ever more sovereignty on the part of the
nations involved, the relinquishing of national powers to the various
supra-national bodies in Brussels, has for everyone involved been
based on trust. Nobody would ever have signed up to any of it without
that trust. But just look where we are now.
When
spokespeople at the troika side of the table stated on Thursday that
they don’t know if Greek banks will be open on Monday, they crossed
a line that should never even have been contemplated. This is so far
beyond the pale, it should by all accounts, if everyone involved
manages to keep a somewhat clear head, blow up the union once and for
all. If a party to a negotiation that can’t get its way stoops to
these kinds of tactics, there is very little room left for talk.
And
all EU nations should understand by now that this is not about Greece
anymore, it’s about all of them. Any member nations that does not
fall into -goose- step with Brussels must from here on in be prepared
to deal with attempts to crush it economically and politically.
Whatever
trust there once was is now gone. And trust, once blown, is painfully
difficult to regain. The negotiations on the Greek debt crisis have
become just another dirty business deal, and have nothing to do
anymore with conversations between equal partners in a union. Even
though that is still what they’re supposed to be. Officially.
Translation:
there are no equal partners in Europe. There only ever were in name.
When people thought they signed up for a tide to lift all boats. The
Greek crisis has destroyed that lift-all-boats notion once and for
all. All that’s left of the union is power politics, of those
(s)elected to represent all member nations, working to crush one of
them with all weapons at their disposal.
One
of those weapons is utilizing the media to incite a bank-run in
Greece, aimed at paralyzing the Greek government into full
submission. The run-up to the bank-run has been building up steam
ever since Syriza took over 5 months ago, but apparently not fast
enough for the troika.
The
threat has always been simmering below the surface; what changed is
that the moral constraint which kept the creditors from speaking out
loud in public about it, was dropped yesterday. And that changes
everything.
The
European Union cannot deliberately aim at a bank-run in an individual
eurozone member nation without quashing the very trust that holds the
union together. The only remaining question after this is: who’s
next in line?
This
is from the Guardian:
Greece is facing a full-blown banking crisis after a meeting of eurozone finance ministers broke down in acrimony and recrimination on Thursday evening, bringing the prospect of Greek exit from the eurozone a step nearer. Some €2bn of deposits have been withdrawn from Greek banks so far this week – including a record €1bn yesterday – triggering fears that a breakdown in talks would spark a further flight of funds.
[..] leaders of the eurozone and the IMF aimed bitter criticism at the leftwing Greek government, accusing it of lying to its own people, misrepresenting and misleading other EU leaders, refusing to negotiate seriously, and taking Greece to the brink of catastrophe.
‘Not
negotiating seriously’ translates as ‘not doing what we tell you
to do’. It’s absurd to claim that Syriza, which has tabled an
entire range of proposals, one even more detailed than the other,
does not attempt to negotiate seriously. It’s a claim the Greek
side can make just as well. The underlying tendency is that the
troika does not see the talks as taking place between equal partners.
And that is lethal for the whole idea behind the European Union. It’s
its instant death even if people will be slow to realize it.
Christine Lagarde, the head of the IMF, said there was an urgent need for dialogue “with adults in the room”. She added: “We can only arrive at a resolution if there is a dialogue. Right now we’re short of a dialogue.”
This
is something only a juvenile mind would come up with. Lagarde is
obviously not worried about her reputation, she feels -nigh-
omnipotent, but she really should be. She’s causing enormous damage
to the IMF, and its future standing in the world. There are many IMF
member nations who now know they can and must expect to be treated in
the same way should there ever be a conflict involving their nation
and the Fund.
Lagarde has taken a tough line on debt talks with Athens over the past four months, since the radical leftist Syriza government took control and insisted creditors drop proposals for further austerity as the price of releasing the last tranche of bailout funds. At the talks in Luxembourg she reportedly introduced herself to Greek finance minister Yanis Varoufakis as “the criminal in chief”, in reference to Tsipras’s claim earlier this week that the IMF bore “criminal responsibility” for the situation in Greece.
Pierre Moscovici, the European commissioner for economic affairs, who has been more sympathetic to the Greek case, said: “There’s not much time to avoid the worst.” He appealed to the Tsipras government to return to the negotiating table, making it plain that Athens has been treating its creditors and EU partners with contempt.
Who’s
been treating whom with contempt? Have the Syriza team ever been
treated as equal partners in the conversation? This is perhaps best
expressed by Bob Dylan’s “It’s a restless hungry
feeling that don’t mean no-one no good; when everything
I’m-a-sayin’, you can say it just as good”.
Dijsselbloem demanded that the Greek government act quickly to restore trust and stem the haemorrhaging of deposits. “It’s a sign of great concern for the future,” he said. “It can be dealt with, but it requires quick action.”
It’s
Greece that caused the deposit flight? The only sense in which that
could be true is that is has refused to bend over and let the troika
have its way with its democratically elected government.
Top officials from the ECB told the meeting that Greece might need to impose capital controls within days. They said the banks would be open on Friday. “On Monday, I don’t know,” Benoit Coeure from the ECB board was said to have told the ministers.
There
is no longer even any semblance of equality among partners either in
the eurozone or at the negotiating table. It’s important to see
this not just in the light of the current talks, but in that of
future of the European Union as a whole, and in that of future talks
about debts that EU member nations have incurred with any of the
troika parties.
What
the antagonism is about is really quite simple. Though the fact that
the troika is split doesn’t make it any simpler. The IMF won’t
budge on imposing additional austerity measures, but wants Europe to
execute debt relief. Europe is more flexible on austerity but refuses
debt relief.
Or,
actually, it says debt relief can be discussed, but only after Greece
has signed on for a list of demanded ‘reforms’. For the Greeks,
that’s the wrong way around. Not in the least because the EU
floated debt relief back in 2012 but has never delivered.
Politicians
and media in countries like Germany and Holland have engaged in so
much rhetoric about Greeks living lavishly off other nations’
taxpayers’ money that they fear for their political careers if they
were to offer an overt restructuring and tell the truth about wat
actually happened in the bailouts.
The
IMF’s Olivier Blanchard this week held out some vague idea of even
longer maturities and even lower interest rates as the definition of
debt relied for Greece, but what is needed is a much more
comprehensive restructuring. Along the lines of a 50% or so reduction
of the debt.
The
problem is that Germany, France and Holland used the money that
Greece now supposedly owes, to bail out their own banks. And never
presented it domestically this way. But that is not Greece’s fault,
or its responsibility.
The
second main issue, austerity measures, comes in the shape of
‘reforms’ to the Greek pension system. Which badly needs a
revamp, and Syriza is the first to acknowledge that. What it doesn’t
want, though, is for the system to be cut first, and changed only
later. Because that would mean that many Greeks who are already in
dire need would from one day to the next be made even poorer.
And
since any comprehensive change to the pension system would be
laborious and time consuming even under advantageous circumstances,
and there is little faith that Europe wouldn’t stretch it out even
further, cutting now and talking about it later is not acceptable for
Varoufakis and his people.
To
add to the vicious irony of the situation, as Paul De Grauwe noted,
Greece is illiquid -it has no access to capital markets-, but it’s
not insolvent.
[Greece's] headline debt burden of 175% of GDP in 2015 vastly overstates the effective debt burden. The latter can be defined as the net present value of the expected future interest disbursements and debt repayments by the Greek government [..] Various estimates suggest that this effective debt burden of the Greek government is less than half of the headline debt burden of 175%.
[..] the effective debt burden of the Greek government is lower than the debt burden faced by not only the other periphery countries of the Eurozone but also by countries like Belgium and France. This leads to the conclusion that the Greek government debt is most probably sustainable provided Greece can start growing again[..]. Put differently, provided Greece can grow, its government is solvent. [..]
Today Greece has no access to the capital markets except if it is willing to pay prohibitive interest rates that would call into question its solvency. As a result, it cannot rollover its debt despite the fact that the debt is sustainable. There is something circular here. If Greece is unable to find the liquidity to roll over its debt it will be forced to default. [..] The expectation that the Greek government will be faced with a liquidity problem is self-fulfilling.
If
the ECB would simply include Greece in its €60 billion a month QE
bond-buying scheme, and buy Greek bonds as well as allow Athens to
access international capital markets through one of Mario Draghi‘s
whatever-it-takes statements, the crisis would be lifted in very
substantial ways, in a heartbeat.
Instead,
the troika part of the ‘negotiations’ does not involve trying to
find such a solution, what they want is for Greece to give in, give
up, bend over, and take it up the …
The
powers that be are so full of hubris and of themselves that they
ignore the fact that their actions today sow the seeds for the demise
of all three of their constituencies, IMF, ECB and EU.
None
of these institutions has any raison d’être or any claim to fame
unless there is explicit trust in what they represent. That trust is
now gone, and it’s hard to see how it can ever be recovered.
Whatever
happens to Greece going forward, that is perhaps the biggest gain its
dramatic crisis will gift to the rest of Europe, and indeed the
world. Which therefore owe it a debt of gratitude, and of solidarity.
Debt Rattle June 19 2015
No comments:
Post a Comment
Note: only a member of this blog may post a comment.