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

Featured Stings

MWC 2016 LIVE: Mobile Connect availability hits 2B

EU: Protecting victims’ rights from cartels and market abuses

Failing to see reality or deceiving the masses? The EU about poverty and social exclusion

#TwitterisblockedinTurkey and so is Erdogan

All talk but no action against fraudulent bankers

Court of Auditors: EU budget money is there to be spent not to create value

COP21 Breaking News_03 December: Unprecedented Global Alliance for Buildings and Construction to Combat Climate Change

A Sting Exclusive: “The Chinese economy is steady and moving in the right direction”, Ambassador Yang of the Chinese Mission to EU underscores from Brussels

Can one FTA and 110 lobby meetings make the dirty oil clean in Europe?

European Youth Forum welcomes the European Commission’s proposed revision of the Union Code on Visas, however it does not go far enough

On Grexit: Incompetence just launched the historic Ultimatum that could open “pandora’s box”

Medical Doctors in Industry 4.0: pure science fiction

EU-US trade deal: Europe to Americanize its social model?

Finance for SMEs: Alternative supply mechanisms do exist

Cyprus Parliament says no to blackmail

Commission tries to solidify the EU statistical system

The EU seals CETA but plans to re-baptise TTIP after missing the 2016 deadline

Azeri natural gas will keep the EU warm soon

Parliament cuts own spending to facilitate agreement on EU budget

Europe must regain its place as world leader in digital technology

MWC 2016 LIVE: Under Armour learns from “robust community of data”

Irish Presidency: Not a euro more for EU budgets

Intel, Almunia and 1 billion euros for unfair potatoes

Will Europe be a different place this Monday?

Commission publishes the first report on the issuance of a Eurobond

A Sting Exclusive: “Junior Enterprises themselves carry out projects focusing on the environment”, JADE President Daniela Runchi highlights from Brussels

Galileo funding: A ‘small’ difference of €700 million

Responsible Artificial Intelligence

Macro-Financial Assistance: Europe’s way to control Ukraine?

The 28 EU leaders unable to start a relevant debate on migration and Brexit

What next after more sanctions against Russia, will the Ukrainian civil war end?

Is the West gradually losing Africa?

A Sting Exclusive: “Paris is the moment for climate justice”, Swedish MEP Linnéa Engström claims from Brussels

EU’s new environmental policy on biofuels impacts both the environment and the European citizen

European Court of Justice to Google: It is #righttobeforgotten but not #righttoberemembered

Draghi drafts a plan to donate more money to bankers, the era of ‘money for nothin’ is flourishing

Joris in Indonesia

Glaringly false reassurances about the repercussions of the EU-US free trade agreement

A Sting Exclusive: China’s Foreign Minister Wang Yi on South China Sea issue at the ASEAN Regional Forum

The EU Commission does nothing about the food retailing oligopoly

The issue of health literacy and how it affects European health policies

Education and Training: where do we stand in 2014?

EU to lead one more fight against climate change at G7 summit

Earthquake: Monte Dei Paschi Di Siena

Ukraine: Is there a political force able to undo the division?

EC v Samsung: A whole year to compile a case

Arlington, USA: kick-off of the fifth round of the EU-US boxing match

Vendor Pulse – 2000

Draghi indirectly accuses Germany of using double standards in financial issues

Europe’s richest regions actively seek investment from China’s biggest banks

Innovation and Entrepreneurship Changing the Face of Europe

The Ecofin Council creates officially the clan of ‘undead’ banks

Forget about growth without a level playing field for all SMEs

How China Mended My Heart

A new global financial crisis develops fast; who denies it?

European Business Summit 2014: Sting Report, Day I

COP21 Breaking News_04 December: Launch of CREWS, climate risk & early warning systems

The EU threatens to occupy Libya militarily; is another colonial war brewing?

Britain heading to national schism on exit from EU

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 )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s