Bankruptcy or referendum: which one is going to be first?

He who laughs last, laughs longest. Photo taken from last week's EU Summit on migratory pressure in the Mediterranean (TVNewsroom European Council, 23/04/2015)

He who laughs last, laughs longest. Photo taken from last week’s EU Summit on migratory pressure in the Mediterranean (TVNewsroom European Council, 23/04/2015)

The move by Alexis Tsipras, the Greek Prime Minister, to reshuffle its negotiating team will certainly ease the tense in Brussels but is not going to bring the desired deal. The main thorns for unlocking the next tranche are the “red lines” of the Greek government and its anti-austerity policy.

Greece is struggling to pay wages and pensions, let alone its obligations against the three institutions (EU-ECB-IMF). Recently, in a desperate attempt to gather money, the Greek government asked the municipalities and universities to put all their excess funds to the country’s disposal. It is more than clear that Greece is running out of money and time with the external repayments to be the main issue.

The other EU member states together with the technical representatives, who are in change of negotiating and evaluating the efforts and reforms of the Greek authorities, are not convinced that Greece is going or willing to follow the guidelines of the February 20 agreement and continue asking for more reforms. Thus, the EU is facing great difficulties to find an imminent common solution with Greece whose future is very ominous with a possible bankruptcy not to be excluded in the near future.

EU stance does not rely on “names”

Alexis Tsipras decided to pushback Yanis Varoufakis in the negotiations with the EU institutions. This decision came after the completion of the Eurogroup that took place in Riga on April 24 between the Eurozone Finance Ministers and triggered shocks in the left-wing party Syriza. The Greek Finance Minister, one of the most valuable assets of the Greek government, couldn’t reach a deal with his EU counterparts regarding structural reforms which will lead to a short liquidity breath that Greece so anguishly seeks. Consequently, Eucleides Tsakalotos, the Chief Economics Spokeman of the Greek government is going to take Mr Varoufakis’s place over the debt and reforms negotiations.

The need for a less intense communication with Europe is targeted by this replacement. Furthermore, the fact that Mr Tsakalotos is born in Rotterdam and he has a milder personality compared to Mr Varoufakis are the points that the Greek government focuses on in order to find as many allies as possible. However, this alteration is going to bring minor progress to the negotiations. The people who represent a country do matter but what is most important in this case is the country’s policy. And this is the main reason why the Greek government cannot agree with the EU institutions which are keenly insisting on their demanding “reforms” stance.

Greece is running out of money

The Greek government showed once more that has no reserves left to pay for its debts. More in detail, the recent legislative act that was brought in the Greek parliament urgently is forcing the local authorities to deliver all the excess cash that they have in their disposal. It is estimated by the governmental officials that if such an action completes successfully it will bring 2-2.5 billion euros to be used for the country’s needs.

Even if that happens, there are also external apart from internal debts that Greece has to repay in the next two weeks. In particular, Greece has to pay 200 million euros and 750 million euros of debt interests to the International Monetary Fund (IMF) by May 1 and May 12, respectively.

A referendum is most likely to be held soon

Alexis Tsipras was interviewed in TV two days ago and stated that his party’s first priority is to pay salaries and pensions. What is more, he mentioned that in the event of a dead end in talks with the institutions, the people will decide for the country’s fate via a referendum excluding thus the choice of elections. The Greek Prime Minister specifically stated that: “If I find myself in the difficult position of an agreement which falls outside our mandate, then the Greek people will have to give the answer”.

Recent surveys have shown that the majority of the Greek citizens are in favor of staying within the Eurozone. The latter means that if Syriza decides to hold a referendum and the question will be: “Will we implement all the measures our creditors impose in order to stay in the Eurozone?; then the answer will most probable be affirmative. By calling a referendum, the Greek government wants to avoid doing, without people’s will, reforms that has pre-announced as “red lines” (such as pension cuts and reforms in the labor sector) before the elections of the January 25.

Greece’s future seems inauspicious

Will Greece manage to find the money and not get bankrupt? In an ideal for Greece scenario, this will mean a maximum two-month delay. But what will happen next? The bigger picture for Greece and the rest EU countries is to agree on the creation of a permanent plan in June when the extension of the current programme ends.

All in all, as things stand, even the most optimistic person would not bet a euro of his money on a positive outcome.

 

Follow Chris on Twitter @CAnyfantis

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

MWC 2016 LIVE: Intel focuses on 5G “beyond the Powerpoint”

Why the euro may rise with the dollar even at lower interest rates

EU security and defence industry prepares positions for ‘producers’ and ‘customers’

The EU Parliament and the ECB unknowingly or unwillingly fail to protect our financial assets

The right approach to addressing overcapacity problem from a Chinese perspective

EU Commission closer to imposing anti-dumping duties on Chinese solar panel imports?

Lagarde: Keep feeding the banks cut down wages and food subsidies

Cross-roads

EU Parliament approves CETA: the EU-Canada free trade deal sees the light in Trump’s gloomy era

The EU checks the multinationals for tax fraud but Britain may sail out of the EU via Panama

Finance for SMEs: Alternative supply mechanisms do exist

Canada and EU officially sign the trade agreement that could open-up the road to TTIP

The banks dragged Eurozone down to fiscal abyss

Lies and reality about incomes and wealth in the EU

MWC 2016 LIVE: BT chief aims to be at UK 5G forefront

Terrorism and migrants: the two awful nightmares for Europe and Germany in 2016

Eurozone: Disinflation engulfs the industrial goods sector

More state aid to big firms, no special provisions for the SMEs

My Mothers

IMF: The global economy keeps growing except Eurozone

A Sting Exclusive: “Global Climate: Our Common Responsibility”, S&P MEP Miriam Dalli underlines from Brussels

Draghi indirectly accuses Germany of using double standards in financial issues

An entrepreneurial point-of view on tackling the migration crisis and the risks of abolishing Schengen

On Youth Education: “Just a normal day in the life of a medical student”

Eurozone again whipped by Greek winds

Diana in Vietnam

Solitary Britain sides with US aggressing Russia and chooses hard Brexit

A new crop of EU ‘Boards’ override the democratic accountability and undermine the EU project

Eurozone economy desperately needs internally driven growth

Parliament approves key directive regulating professional qualifications

Europe turns out more jobs this summer

“Hasta la vista” Google says to Spain and now Europe is next?

Elections in Europe: No risks for the EU, leaders readying to face Trump-Brexit

‘Habitual residence’ rules deprive EU workers from social benefits

TTIP’s 11th round major takeaways and the usual “leaked” document

Juncker and Tusk killed Greece on 07 July 2015 to meet the Commission’s summer vacation plan? #Grexit #Greferendum #Graccident

EU Parliament says ‘no’ to austerity budget

Dark spots on EU humanitarian aid spending

Banks get new capital for free and citizens pay the bill

UK’s Cameron takes the field to speed up TTIP talks. Will “rocket boosters” work?

France breaks budget promises once again and the EU’s finance offices are shaking

The US Congress and European Parliament vote are TTIP’s 10th round’s lucky cards

Parliament sets up plan to fight the 3,600 criminal rings of EU

The Sting’s Mission

Happens now in Brussels: Green Week sets the EU and global climate policy agenda

JADE Spring Meeting 2017– day 1: Excellence awards, panel discussion, keynote speeches

Draghi repels Trump’s threats, rejects Schauble’s dictums

Greener economies and investment to reduce unemployment and increase global growth

A young person’s perspective on the Paris and Beirut attacks and aftermath

Lost in translation

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s