The world is moving forward full speed ahead and the Greeks seem to be the heavy anchor that has not been effectively lifted. This time though it is nothing about the glass of the negotiations being half empty or half full, as the eurosceptics or the pro-Europeans would normally say. The glass broke last Wednesday in Brussels when the Greek Prime Minister stayed with President Juncker inside the European Commission’s meeting rooms till the early morning hours. Although expectations were high, last Wednesday’s “white night” in Brussels turned out to be dark black both for Athens and Europe.
Given the nasty polarised political scene in Athens, this newspaper has repeatedly stated that if the Greeks are to continue doing business in the common currency, Brussels (aka ECB and European Commission) and Washington (IMF), or else troika or Brussels Group as the Greeks like to call, need to concede. Not so much because the Greeks have suffered hell during the last five years, but mostly because it is a one way road that Europe needs to stick together and continue together.
Europe has indeed showed its solidarity towards Greece and the rest of the member states in need but also made many mistakes during the years of the crisis. A great example is the inclusion of the IMF inside the “salvation” mechanism. Not to mention the absolute blindness over the repercussions of strict monolithic austerity in Europe.
Unfortunately last Wednesday Troika gave Mr Tsipras their “best draft deal”, after 4 months of tough back and forth negotiations with the newly elected Greek government. All in all, he content of the deal proposed by the lenders is the worst and most austere deal that has been ever brought to Greece during the last austerity years. It entails major austere reforms that demand the massive reduction of the regular pensions, salaries, a substantial increase in VAT tax and many more.
The creditors aim to alleviate the pain by demanding smaller surpluses from the Greek state. It is clear for any political analyst who has read the proposal that more austerity was proposed to Greece last Wednesday, in order to receive the kiss of life and secure some loan support. To be stressed here that Greece has not received a eurocent for almost 12 months now, which could include the country in a world record, since it has been left outside the markets and with no support for almost a year.
The Greek Prime Minister, having seen the hard stance of the Troikans, although he initially reassured the press right after his closing statement in Brussels that Greece would pay IMF’s settlement of 300 million euros due yesterday, during his flight back to Athens he simply changed his mind. Greece did not honour yesterday, as it owed to, its obligation to the International Monetary Fund. Instead, the Bank of Greece made a plea to IMF to bundle all the settlements due in June towards the IMF and settle its account at the end of the running month. To be noted here that this is something that has not been recorded by the IMF since the 80s; the country that once bundled one month’s payment settlements in the past was Zambia.
So the prophecy came true, “Greece will reach a point where it will not be able to pay IMF”. So what? This is basically the reaction of the IMF executives and also the European Commission. Since this “bundling” of payments in the same month is in accordance to the IMF regulations, then Greece, at least allegedly, had every right not to pay.
Further, the Greek Prime Minister, denouncing the proposed deal by the creditors left Brussels and decided to convene the full body of the Greek Parliament to discuss the proposal received. “I want to believe that the proposed deal by the creditors is a bad moment for Europe”, Mr Tsipras opened his long speech yesterday evening. In his attempt to consolidate all the parties to support a “single Greek negotiation front”, he stressed once again his government’s red lines that will not succumb to additional harsh austerity measures. Moreover, he passed the following clear message/threat towards the lenders: “If they want (the creditors) to slave an entire nation, they should know that they will just have the opposite results”.
Despite the enthusiasm, however, the Greek Prime Minister did not manage to find many allies in the opposition parties. It was only Panos Kammenos, the leader of the nationalist “Independent Greeks” party, that is already taking part in the Syriza government, who expressed his utter support to the negotiations of the Greek government. Everybody else was against Tsipras.
New Democracy leader, Antonis Samaras, made it clear that under no circumstances he approves neither the agreement proposed by the lenders nor Syriza’s negotiation fruits. PASOK incumbent leader, Eleftherios Venizelos, also heavily criticised Mr Tsipras for pushing the things to the edge. Similarly leaders of smaller parties expressed themselves against the Greek government and its risky hazardous negotiation tactics.
What next? Nobody really knows and chances are that the plan of the Greek Prime Minister is fairly blurry too. In the meantime, the account of the Greek state is almost empty and according to sources, Greece cannot honour its payments to IMF in June at all! Athens stock market is in free fall and the economy is barely breathing; not to mention that the Greek government’s credibility to internal payments is under serious doubt and citizens are cashing their money making the risk of a possible bank run very high. What is worse, the Greek Prime Minister threatens the creditors and his political opponents with elections, if agreement is not finally reached.
The only solution to the absolute Greek chaos is that the cool wise political brains of the European elite fully grasp the inability of the Greeks to get hold of themselves. If Brussels does not water down their demands, Greece will surely jump off he cliff and bring unpredictable consequences to the stability of the European and global economy and also geo-political strategy.
In the next few days it remains to be seen whether Mr Juncker can truly stand it knowing that his name will be written bold in history as the President who let the Union break, in order to save a couple of billion euros, when at the same time Mario Draghi gives away hundreds of billions of euros for free to restore growth.