The time is up but the game is still not over for Greece: negotiations continue in anticipation of a new deal

The one man that opened the pandora’s box in Greece and EU. Alexis Tsipras, the Prime Minister of Greece at the last European Council, (TVnewsroom, 26/06/2015)

The deadline of the 4-month extension that the Greek government had received on February 20 just expired today. However, the Greek government and particularly the Greek Prime Minister Alexis Tsipras on a last moment decision to return to the negotiating table sent a letter to the institutions only hours before the expiration of the bailout programme.

The latter event mobilized the European mechanisms with the president of the Eurogroup to call for an extraordinary teleconference meeting of the Finance Ministers of the Eurozone but no agreement was made there. The decision of this meeting was to reconvene this evening in order to further discuss the proposal of the Greek government for a two-years 29.1 billion euros funding through the European Stability Mechanism (ESM).

This basically means that the programme expired with the Greek government not being able to repay its obligations to the International Monetary Fund (IMF) that were due yesterday. The anxiety keeps on lingering in Greece and the citizens are experiencing unprecedented events. Capital controls and closed banks for the third day create a very turbulent atmosphere.

Except for today’s crucial Eurogroup, the Council of the European Central Bank (ECB) is also metting in order to decide on Greece’s liquidity bank supply through the Emergency Liquidity Assistance (ELA).

Another proposal on the table

The second bailout programme belongs to history. The fact that Greece and its creditors (IMF, ECB, EC) didn’t come to an agreement regarding the terms and the measures that Greece had to undertake in order to receive financial support lead to this unpleasant event. It is unpleasant not only for Greece that faces horrendous economic problems but for Europe as a whole.

Eurozone’s Finance Ministers responded to Greece’s request for another programme extension with a clear NO and stated that they will examine the Greek proposal for a two-year financial support at today’s meeting.

The Greek Prime Minister signed and sent a proposal to the president of the Eurogroup and the chairperson of the board of governors of ESM making public that is asking for a 29.1 billion euros “loan” from the ESM in the next two years in order to meet the country’s internal and external obligations.  However, as stated by Alexander Stubb, the Finnish Finance Minister, “request for ESM-programme is always dealt with through normal procedures”; meaning that it requires the approval of national parliaments.

China cries out for a deal

It was last Monday when the EU-China summit took place in Brussels in order to promote the relations between the two sides. During that event, Mr Li Keqiang, the Chinese Premier, urged the EU to support Greece and keep it within the Eurozone. More specifically, Mr Keqiang stated that: “Let me reiterate that China always supports European integration and that China hopes to see a prosperous Europe, a united European Union and a strong euro. However, the issue whether Greece stays within the Eurozone not only concerns the stability of the euro, but also the stability and economic recovery of the whole world”.

Jean-Claude Juncker representing the EU at this business summit responded that he is doing his best in order to resolve the Greek debt crisis.  It has to be noted though that the president of the EC was consistently apologizing for rescheduling the summit a few hours forward and claimed that it was Greece’s fault since Mr Juncker had to attend a press conference for Greece at the same day.

ECB to decide on ELA

The Governing Council of the ECB is also meeting today in Frankfurt for the scheduled non-monetary policy meeting in which Greece will be the “hot” topic. Mario Draghi and the rest of the Council’s members will have to make a tough decision on whether to support the Greek banking system through ELA or stop the money supply with capital controls remaining in the country.

Although Germany states through the Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble that they want to help Greece and continue negotiations, their advice to Mario Draghi is not to provide liquidity to the Greek banks by raising the ceiling of ELA since the second programme expired.

This sounds quite oxymorous and blackmails a country which is at a “default” situation. The latter is reinforced by the fact that the rating agency Standard & Poor’s downgraded the four systemic Greek banks (Eurobank, Alpha bank, Piraeos bank and National Bank of Greece) to “Selective Default” from “CCC” due to the recent capital controls and bank holidays.

The next day for Greece

Everything seems that nothing can stop this referendum next Sunday. However, the question-deal is not going to be on the table for the Greek government after July 6 as the European institutions claim. Greece’s creditors are willing to negotiate in order to keep Greece inside the bloc and euro but this will happen only after the referendum according to Angela Merkel.

All in all, the Greek people have better stay calm in these historic moments and evaluate with credible information the situation by taking the most out of the talks from the two sides.

The stakes are too high now for every Greek citizen. She is called to decide on the future of the next generations to come.