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.

the sting Milestones

Featured Stings

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

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

Why flexible workspaces are the key to winning the talent war

“France will be there, it will always be there!”, French President Hollande says in a rather disorganised speech; the Sting reports live from World Economic Forum 2015 in Davos

Getting people with disabilities into work requires data

Business management: how can you introduce new ideas?

Trump’s Russophiles under investigation, Europe remains ‘en garde’

The new Kiev rulers ask $35 billion from the West

Coding in Namibia: UN supports young women’s computing career dreams

Healthcare’s a human right, not ‘a privilege for the rich’ UNAIDS argues at Davos

Why precision medicine is the future of healthcare

Medical students: catalysts to close the gender gap

New book honours UN women who made HERstory

Cameroon: Clear ‘window of opportunity’ to solve crises rooted in violence – Bachelet

Around 52 million in Near East, North Africa, suffering chronic undernourishment, new UN food agency report reveals

WEF Davos 2016 LIVE: The health of capitalism won’t be the only worry for those who head for Davos

Mergers: Commission approves Varta AG’s acquisition of Energizer’s divestment business, subject to conditions

Environmental labelling, information and management schemes are central to the circular economy

Negotiated two-State solution still ‘the only option’ for Palestine: Guterres

Air pollution: How to end the deaths of 7 million people per year

4 ways blockchain will transform the mining and metals industry

Pollution could be harming every part of your body. Here’s how

UN human rights ruling could boost climate change asylum claims

A Sting Exclusive: “The competitiveness of Europe depends on a digital single market”, EPP President Joseph Daul highlights live from European Business Summit 2015

Mergers: Commission opens in-depth investigation into proposed acquisition of Transat by Air Canada

MEPs want ambitious funding for cross-border projects to connect people

WHO chief underscores need to address climate change following visit to Bahamas

Humanitarian aid: €7 million for disaster preparedness in Southern Africa and Indian Ocean region

2018 Golden Pen of Freedom Awarded to Maria Ressa of the Philippines

Who is first (and last) in the race to build a workforce fit for the future?

We won’t win the online security war without people power

4 ways the circular economy can help heavy industry reduce emissions

EU prepares a banking union amidst financial ruins

A ‘strong and united Europe’ has never been more needed, declares UN chief Guterres

Here are five ways we can make mental healthcare better

Guterres expresses ‘grave concern’ following explosion at large political rally for reform-minded Ethiopian Prime Minister

Coronavirus: Commission concludes exploratory talks with Valneva to secure a new potential vaccine

2013, a Political Odyssey: What future for Italy?

3+1 issues to haunt tomorrow’s EU Summit

‘Good enough’ global cooperation is key to our survival

5 amazing schools that will make you wish you were young again

FROM THE FIELD: Finding refuge in the ‘beautiful game’

There is a forgotten solution to climate change that we must invest in – nature

Coronavirus: a Disease that spreads as fastly as its fake news

How data is transforming the way we care for the ocean

This German supermarket’s shelves are filled with food other stores won’t sell

How trust and collaboration are key in India’s last mile response to the COVID-19 crisis

The European Sting writes down the history LIVE from G20 Leaders’ Summit in Turkey

At UN, Middle East countries discuss steps towards regional nuclear-free zone

Banking package: Parliament and Council reach an agreement

Coronavirus vs flu: how do they compare?

Autumn 2020 Economic Forecast: Rebound interrupted as resurgence of pandemic deepens uncertainty

Globally, youth are the largest poverty-stricken group, says new UN report

How a bionic arm is helping one little girl enjoy the things most take for granted

If you build it, they will come: Why infrastructure is crucial to tourism growth and competitiveness

7 steps to becoming a ‘CEO Academy’

Towards the Rise of the United States of the Atlantic?

How personalized care can tackle the late-life loneliness epidemic

Vaccines: contract between European Commission and AstraZeneca now published

There is no greater sorrow on earth than the loss of one’s native land

Are we letting politicians play with migrants’ health?

Mobile technology facilitating social distance in the middle of a pandemic

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