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

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

The EU cuts roaming charges further while the UK weighs Brexit impact

Does Draghi have another ace up his sleeve given his Quantitative Easing failure?

We need a reskilling revolution. Here’s how to make it happen

8 amazing facts to help you understand China today

Is it just visa-free travel that Erdogan demands from the EU to not break the migration deal?

Can a Bavarian Oktoberfest beer indulger bring down the Berlin government?

2018 ‘terrifying’ for Yemenis but ultimately a ‘year for hope’ says UN Special Envoy

Crimea: The last bloodless secession of a Ukraine region?

EU Copyright Directive: Google News threatens to leave Europe while media startups increasingly worry

Lithuania needs to get rid of the victim mentality

A day in the life of a refugee: the wait

The cost of healthcare is rising in ASEAN. How can nations get the most for their money?

Climate change and health – can medical students be the solution?

Terrorist content online should be removed within one hour, says EP

Parliamentary bid to democratize Myanmar constitution a ‘positive development’ says UN rights expert

North Korean families facing deep ‘hunger crisis’ after worst harvest in 10 years, UN food assessment shows

What does reimagining our energy system look like?

OECD Steel Committee concerned about excess capacity in steel sector

UN chief saddened at news of death of former US President George H.W. Bush

COP21 Breaking News_04 December: Building a Sustainable Future – speech by UNEP Deputy Executive Director Ibrahim Thiaw at the LPAA Thematic Event on Buildings

Globalization 4.0 must provide for the poorest, or it risks causing chaos for everyone

We can save the Earth. Here’s how

EU job-search aid worth €9.9m for 1,858 former Air France workers

Three ways the world must tackle mental health

The banks dragged Eurozone down to fiscal abyss

Global Citizen-Volunteer Internships

It’s not kids’ screen time you should worry about – it’s yours

Israeli security forces’ response to Gaza protests ‘a recipe for more bloodshed’, says UN expert

EU budget 2019 approved: focus on the young, innovation and migration

The cost of housing is tearing our society apart

Chinese Premier Li Keqiang’s speech from World Economic Forum’s Annual Meeting of New Champions

Japanese law professor elected new judge at the International Court of Justice

At Ministerial session, UN regional office in Beirut to focus on technology for sustainable development

It’s time to stop talking about ethics in AI and start doing it

Eurozone: Inflation plunge to 0.4% in July may trigger cataclysmic developments

Office workers in these economies clock up the most extra hours

When connectivity is not enough: the key to meaningful digital inclusion

Nearly 900 children released by north-east Nigeria armed group

From ‘dead on the inside’ to ‘truly alive’: Survivor of genocide against the Tutsi in Rwanda recounts her story as UN marks 25th anniversary

Japanese banks to move their European HQ from London to Frankfurt after Brexit

Europe bows to Turkey’s rulers, sends Syrian refugees back to chaos

The Schengen area is at a crossroads

AI has huge potential – but it won’t solve all our problems

Climate change and health: an everyday solution

China-EU Relations: Broader, Higher and Stronger

Consumer product quality: Parliament takes aim at dual standards

EU-US Trade: European Commission endorses rebalancing duties on US products

Erdogan vies to become Middle East Sultan over Khashoggi’s killing

A Sting Exclusive: EU Commission’s Vice President Šefčovič accentuates the importance of innovation to EU’s Energy Union

Commission takes further action to ensure professionals can fully benefit from the Single Market

CHINA: five letters that could mean…

Who really cares for the environment?

Is a deal over EU budget possible today?

Trump asked Merkel to pay NATO arrears and cut down exports ignoring the EU

Here’s how to build energy infrastructures fit for the future

EU-China relations under investigation?

UN rights office calls for action to end ‘repression and retaliation’ in crisis-torn Nicaragua

How can we build a workforce for our digital future?

Let’s Learn

Why growth is now a one way road for Eurozone

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 )

Google photo

You are commenting using your Google 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 )

Connecting to %s