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

the sting Milestone

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

Parliament adopts its position on digital copyright rules

On Youth Education: “Just a normal day in the life of a medical student”

The green hydrogen revolution has started, and it won’t be stopped

Varna (Bulgaria) awarded European Youth Capital 2017

Ebola: EU provides an additional €30 million to tackle the outbreak in the Democratic Republic of Congo

Tuesday’s Daily Brief: prizewinning journalists freed in Myanmar, new tracking tool for suspected terrorists, and a global bid to stop snakebite deaths

Mental health and suicide prevention: the contradictory access in a reference city of southern Brazil

First Western Sahara talks at UN in six years, begin in Geneva

Killing of aid worker in Syria part of ‘disturbing trend’

Drones are saving lives in Tanzania’s remote communities

“Leaked” TTIP document breaks post 8th negotiations round silence and opens door to critics

Here are three technology trends changing the way you travel

UN’s Bachelet rejects Sri Lankan official’s ‘spin’ on Human Rights Council encounter, urges reforms

Don’t let smoking steal life’s breathtaking moments, urges UN health agency

Eurozone plans return to growth

Afghanistan: UN condemns blasts that leave 8 dead at cricket stadium

These are the 5 most exciting cycling projects in the world

MEPs and European Youth Forum call on EU to Invest in Youth

LGBT community in Chechnya faces ‘new wave of persecution’: UN human rights experts

UN launches Facebook Messenger-powered bot to take on climate change

Why we need artists who strive for social change

Botswana has decriminalized gay sex. But, it’s still illegal in 70 countries

French elections: by the time the EU economy revives and the migration crisis is solved extremists could take over Europe

Estonian Prime Minister Ratas: Europe is a thought that must become a feeling

UN Children’s Fund chief condemns ‘horrific’ Kabul bomb attack

The age of influence: why digital platforms must come clean about political ads

Council’s position on Visa Directive a step back for young people’s mobility

Posting of workers: final vote on equal pay and working conditions

European welfare states are failing young people

How the future of computing can make or break the AI revolution

Google prepares to final EU judgement over Android antitrust case

Chart of the Day: These are the world’s most innovative economies

Greece and Ukraine main items on EU28 menu; the course is set

New citizenship law in India ‘fundamentally discriminatory’: UN human rights office

This AI trash can is designed to stop you wasting food

WEF Davos 2016 LIVE: “CO2 is not the problem, it is the symptom”, the pilots who crossed the world using solar energy cry out from Davos

It’s just electronic cigarette, don’t worry?

Teamgum @ TheNextWeb 2014

South Korea: A cherished partner for the EU

The EU launches € 1 billion plan on supercomputers and tries to catch-up with competitors

The sad show of Brexit

India is investing more money in solar power than coal for first time

This is the critical number that shows when housing breaks down

How energy infrastructure is shaping geopolitics in East Asia

EU Parliament: Deposit guarantee and trading platform transparency sought

EU summit: Are the London Tories planning an exit from the EU?

Is Eurozone heading towards a long stagnation?

Movius @ MWC14: Discussing novel Communications Applications over a “CAFÉ”

Could the EU’s ban on palm oil in biofuels do more harm than good?

The metamorphosis of the categorical imperative in medical students

Why the Fourth Industrial Revolution needs more arts graduates

This digital currency could build a more sustainable global economy

Key Brazilian border crossing for Venezuela refugees reopens as asylum numbers pass last year’s total

Indonesia has a plan to deal with its plastic waste problem

An EU first: youth Ministers debate youth participation in live broadcast

Britain aligns with EU rivaling US on trade and Iran, abandons bilateral ‘Midsummer Night’s Dream’

Guterres holds ‘focused and frank’ informal discussions over future of Cyprus

UN’s Grandi slams ‘toxic language of politics’ aimed at refugees, migrants

Rich economies not a promise of education equality, new report finds

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