Greece’s Tsipras: Risking country and Eurozone or securing an extra argument for creditors?

Jean-Claude Juncker, President of the EC, received Alexis Tsipras, Greek Prime Minister, (on the left) ahead of the Euro Summit on Greece, which took place last week. (EC Audiovisual Services, Date: 22/06/2015 Location: Brussels - EC/Berlaymont).

Jean-Claude Juncker, President of the EC, received Alexis Tsipras, Greek Prime Minister, (on the left) ahead of the Euro Summit on Greece, which took place last week. (EC Audiovisual Services, Date: 22/06/2015 Location: Brussels – EC/Berlaymont).

The Greek Prime Minister Alexis Tsipras and his governing left wing SYRIZA party, cornered between its populist rhetoric for greener grass and the realities of the dragging on negotiations with the country’s creditors, called for a referendum next Sunday 5 July without a clearly defined question, denying to exactly clarify where the ‘yes’ or the ‘no’ outcome would lead to. The Greek voters are asked to accept or reject two long technical-economic texts, allegedly representing the latest offer of the creditors’ troika (European Union, European Central Bank and the International Monetary Fund). Greece’s partners in the EU interpret the choice as a yes or no to the country’s participation in the euro area. To be noted that Athens walked out from the negotiations table last Friday. It’s possible though for the negotiations to restart after the referendum.

Lying about EU’s offer?

However, the EU Commission denied that those documents represent its very latest proposal and President Jean-Claude Juncker confirmed that his newest offer contained better terms for the Greek side than the Athens government claims it does. In any case the call for the plebiscite last Friday night caused a bank run during the following days drying the ATMs of cash and forcing the government to shut down the banks for at least six working days, Monday 6 July included. Last Saturday afternoon, in view of all that, the European Central Bank informed its Greek constituent part the Bank of Greece, that the emergency liquidity assistance (ELA) facility for the country’s banking system was frozen at Friday’s (26 June 2015) level.

This means that the Greek banking system cannot expect more liquidity advances from the ECB leaving it at the mercy of its depositors, who have already driven the Greek lenders to a quasi failure. Currently the depositors can withdraw from the ATMs only €60 a day per debit card. This limit is not imposed on debit cards issued by foreign banks, thus facilitating the tourists. The Athens Stock Exchange will also remain closed until Monday 6 July. The Greeks run also to fill their cars’ tanks in service stations forming longue queues. Let’s return to politics.

Choosing SYRIZA rather than Greece

In reality, Alexis Tsipras chose to put his country and Eurozone at great risks rather than govern his country as a center-left leader. Let’s see why. As a matter of fact, he preferred to keep his SYRIZA left wing party in one-piece instead of accepting an agreement with Eurozone and passing it in the Parliament with the votes of the opposition parties. Three opposition Parliamentary groups (major opposition New Democracy, socialist PASOK and center Potami [river]) at the exception of the Communist Party and the fascist Golden Down have stated they would accept a bad deal rather than no deal at all. It’s certain that a good number of SYRIZA deputies estimated at 25 would have rejected such an option. In such an event, Tsipras, after having passed the agreement in the Parliament, could have called a legislative election and win it, having ejected from SYRIZA the extreme left deputies who would have denied to endorse with their vote the deal with Eurozone.

Instead Tsipras chose to continue with his SYRIZA left wing party plus the right wing parliamentary group ANEL, the jingoistic junior partner in the governing coalition. All of them are now on roof tops pressing the voters to reject the alleged troika’s proposal and vote ‘no’. The fascist Golden Dawn group said they are also voting ‘no’, while the small communist party is bewildered without a clearly cut position. The rest of the parliamentary groups and the major opposition center-right wing party New Democracy long for the ‘yes’.

Who votes what

Tsipras insisted yesterday night in a public TV interview that the referendum and a potentially strong ‘no’ result will be a powerful argument in his future negotiation with the creditors. It’s very probable that there will be such future negotiations. Yesterday, the European Parliament’s Conference of Presidents (EP President and political group leaders) discussed the latest situation on Greece with Commission President Jean-Claude Juncker. The Conference called for all parties to the talks on Greece to return to the negotiating. In any case, nobody can deny that a continuation of the negotiations is possible after next Sunday.

A large number of Greek and other European politicians consider that a solution can be found in Brussels. Demetrios Papadimoulis, a Greek vice President of the European Parliament (European United Left – Nordic Green Left group) and a heavy weight SYRIZA politician called for the convention of the EU Council. He said this is a unique opportunity for an honorable compromise between the country and its creditors. Pierre Moscovici, the EU Commissioner for Economic and Financial Affairs also confirmed that the door is open for Greece to return to the negotiations table.

The economy deteriorates fast

However, the possibilities are very slim that the government restarts negotiations before Sunday’s referendum. Obviously Tsipras thinks that his position will be much stronger vis-à-vis the troika of EU-ECB-IMF if the outcome of the plebiscite is a strong ‘no’. That’s why he plans to deliver a number of open air speeches in the country’s major cities during this week.

Meanwhile, the economy is deteriorating fast. The country has returned to recession after a mediocre and brief period of growth towards the second half of 2014. Unemployment started rising again and the loans in arrears and the tax collection are again rising and have reached €150 billion. This is quite a different issue from the sovereign debt of Greece (€320bn) held mainly by EU public entities like the ECB, Eurozone governments, some central banks and the IMF. A percentage of it is held by the private sector too. By 30 June, Athens is expected to default for the first time in a loan and interest payment to the IMF amounting to €1.45bn.

The world looks on

The Greek question shook yesterday the world capital markets. The Tokyo stock exchange which opened first after the announcement of the Greek referendum lost 3% in its largest daily fall for six months. In Paris and Frankfurt the losses were even larger with the turmoil while touching especially all European bonds. Only the euro recovered towards the afternoon. Unquestionably, Greece is now in uncharted waters but this is also true for the entire Eurozone. If the outcome of the referendum is ‘no’ the next step could be the exit of the country from the euro area.

This may be a step towards the abyss for Greece but it will shake all Europe and why not the global financial markets, not to say anything about the hard to estimate political and geostrategic implications of the Greek calamity.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

EU decides “in absentia” of civil society

Safer products: stepping up checks and inspections to protect consumers

Minority governments ‘à la mode’ in Europe but can they last long?

Jade Spring Meeting 2017 – day 2: Coporate workshops, general assembly and magna moment

South Eurozone urgently needs fairer distribution of taxation burden

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

Samsung’s profits fall as cheaper smartphones gain market share

EU budget: Commission proposes most ambitious Research and Innovation programme yet

Brussels Vs. Google: The €1 bn EU fine and the US response

Here’s how we get businesses to harmonize on climate change

Neelie Kroes at the European Young Innovators Forum: Unconvention 2014

EU to spend €135.5 billion in 2014 or 6.5% less than this year

EU cracks under the weight of its policy on the Ukraine-Russia nub

Lack of investment and ambition means Youth Guarantee not reaching potential

Chart of the day: These are the cities where the World Cup threatens productivity the most

Trade in fake Italian goods costs economy billions of euros

At last a solid base for the European Banking Union

A young doctor from Glasgow reports: in the UK refugees are left to rot

“Airbnb and YouTube are two great examples of a crowd based capitalism”, key stakeholders outline the boundaries of the 4th Industrial Revolution in Davos

Easing funding woes for UN agency assisting Palestine refugees a ‘wise investment for today and the future’

UN Security Council welcomes results of Mali’s presidential elections

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

SMEs and micro firms sinking together with south Eurozone

Commission hardens its stance against carmakers ensuring emissions reductions targets

Syrian Refugees in Germany face distinctly different challenges than those in Lebanon

UN chief condemns attack targeting international forces in northern Mali

Access to health in the developped and developing world

COP21 Breaking News_08 December: Cities & Regions Launch Major Five-Year Vision to Take Action on Climate Change

Better protection against non-cash payment fraud

A new arrangement between Eurozone’s haves and have-nots

ECB: Reaching the limits of its mandate to revive the Eurozone economy

COP21 Breaking News_08 December: Global Business Community Comes to Paris with Solutions for Taking On the Climate Challenge Across the Board

Counting unemployment in the EU: The real rate comes to anything between 16.1% and 20.6%

Right2Water initiative: Is the Commission ready to listen to citizens?

More answers from Facebook ahead of Parliament hearing today

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

China-EU Summit on 16-17 July 2018: “Work together to address common challenges”, by China’s Ambassador to the EU

EU-wide penalties for money laundering: deal with Council

Digital Single Market: New EU rules for online subscription services

The Parliament paves the way for the creation of the European Banking Union

EU Commission: Banking and energy conglomerates don’t threaten competition!

COP21 Breaking News_10 December: the final sprint of the Final Agreement Negotiations

Commission facilitates the activities of ‘merchants of labour’

EU Budgets: Europe hoping for Xmas gifts

JADE @ European Business Summit 2014: Youth Unemployment – a drive to Entrepreneurship

Sweden well ahead in digital transformation yet has more to do

Girls still being treated as aliens in medicine in the 21st century

Merkel had it her way with the refugees & immigrants but can Greece and Turkey deliver?

China Unlimited: an exclusive interview with the former Ambassador of Hungary to China

What UK and EU risk if Brexit “wins” these elections

The Fourth Industrial Revolution is changing how we grow, buy and choose what we eat

The COP22 is under full deployment while Donald Trump threatens openly to withdraw the US from the Paris agreement

India m2m + iot Forum Hosts Successful 4th Editions of India Smart Cities Forum and India Smart Villages Forum

Road to Brexit: the UK seeks early agreement on Data Privacy with the EU

EU’s unsparing question to UK: now what kind of future relations do you want?

Eurogroup president swallows statement on savings confiscation

EU-Turkey relations: Will Turkey manage to revive the EU accession process talks?

Rohingya cannot become ‘forgotten victims,’ says UN chief urging world to step up support

CHINA: five letters that could mean…

Politics needs to “Youth UP” in order the ensure the future of our democracies

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