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

the sting Milestone

Featured Stings

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

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Can the next financial crisis be avoided?

A week to decide if the EU is to have a Banking Union

Violence on the rise in Darfur following Sudan military takeover, but UN-AU peacekeeping mission maintains ‘robust posture’

Help prevent children ‘from becoming victims in the first place’, implores Guterres at campaign launch

EU Telecoms deal: Fees on calls across the EU capped and 5G network by 2020

The Energy Union: from vision to reality

Terrorist content online: MEPs agree to start negotiations with EU countries

Historic first, as Tolstoy’s War and Peace lands in Geneva, to mark international centenary

MEPs take stock of the EU’s foreign, security and defence policy priorities

Commission: Gifts of €6 billion and free trainees to ‘help’ poor employers

In tech-driven 21st century, achieving global development goals requires closing digital gender divide

Thousands returning to Nigeria’s restive Borno state ‘at risk’; UN ‘gravely concerned’

The psychology of pandemics

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

Why is the EU launching a doomed policy in stopping immigrant waves? What are the real targets?

Access to healthcare: what do we lack?

EU budget deal struck with Parliament negotiators

The quality of health education around the globe

Banking package: Parliament and Council reach an agreement

Merry Christmas from Erdogan, Putin, Mogherini and the Polish firefighter

‘Counter and reject’ leaders who seek to ‘exploit differences’ between us, urges Guterres at historic mosque in Cairo

The hidden risk of virtual reality – and what to do about it

‘Staunch support’ for Iran nuclear deal tempered by concern over missile testing

Afghanistan: Civilian casualties exceed 10,000 for sixth straight year

In New Zealand it takes less than a day to start a business

A Sting Exclusive: “eHealth can change many dimensions of how the healthcare area functions”, Polish MEP Michal Boni underscores from Brussels

EU humanitarian budget for 2020 to help people in over 80 countries

Greenhouse gas emissions have already peaked in 30 major cities

GSMA Mobile 360 Series – MENA in Dubai, in Association with The European Sting

Deeper reforms in Korea will ensure more inclusive and sustainable growth

Parental leave: why we can’t wait a century for equal rights for women

Young people struggling in digital world, finds latest OECD PISA survey

‘Multi-generational tragedy’ in Israel and Palestine demands political will for two-State solution

‘We cannot lose momentum’ on the road to peace in Yemen, UN envoy warns

Conflict diamonds and climate change: Cooperate, don’t compete over natural resources urges Guterres

UN working with both sides, after hidden tunnels confirmed along Lebanon-Israel ‘Blue Line’

These cities score an ‘A’ for environmental action – but hundreds more are falling behind

Joint advocacy letter template to sign and ratify the Treaty on the Prohibition of Nuclear Weapons

Solutions for cultural understanding: medical students’ perspective

Nature is our strongest ally in ensuring global water security

Forward Agenda: What can we expect from 2019?

5 things you need to know about creativity

Pakistan: UN strongly condemns terrorist attack that leaves scores dead and wounded at election rally

Discussions kick off among MEPs and national MPs on economic governance

Number of MEPs to be reduced after EU elections in 2019

Britain, EU take edgy steps to unlock Brexit talks as the war of words rages

DR Congo: Insecurity and attacks mean Ebola will keep spreading, warns world health agency

Youth employment crisis easing but far from over

As Libya talks resume in Geneva, UN negotiator seeks to overcome sticking points

Tools of asset development: Renewable Energy Projects case

UN agriculture agency digs in to help forests and farms build resilience to climate change

‘Multiplicity’ of rights violations in Ukraine as fifth winter of conflict bites

Haiti: ‘Laden with challenges’ but also hope, Mission chief tells Security Council

If people aren’t responding to climate warnings, we need to change the message

Trump aims trade offensive solely to China, renews truce with EU

Tackle ‘unacceptable inequalities’ in cancer care, saving up to seven million lives, WHO urges

Atomic agency cites concerns over Iran testing sites, offers COVID-19 assistance

Delhi Declaration: Countries agree to make ‘land degradation neutrality’ by 2030, a national target for action

Will Western Balkans respond positively to EU initiatives?

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