Hardened creditors drive Greece to dire straits; Tsipras desperate for an agreement

From left to right: Francois Hollande, President of France, Angela Merkel, German Federal Chancellor, Alexis Tsipras, Greek Prime Minister. EU Heads of State or Government meet on 26 June 2015 to discuss jobs, growth and competitiveness, and the security challenges facing the Union. In the sidelines of the summit Francois Hollande and Angela Merkel held a long meeting with the Greek PM Tsipras, who seems obviously stressed with what he hears from the EU’s ‘directory’. (EC Audiovisual Services, 26/6/2015).

From left to right: Francois Hollande, President of France, Angela Merkel, German Federal Chancellor, Alexis Tsipras, Greek Prime Minister. EU Heads of State or Government meet on 26 June 2015 to discuss jobs, growth and competitiveness, and the security challenges facing the Union. In the sidelines of the summit Francois Hollande and Angela Merkel held a long meeting with the Greek PM Tsipras, who seems obviously stressed with what he hears from the EU’s ‘directory’. (EC Audiovisual Services, 26/6/2015).

Alexis Tsipras, the Greek Prime Minister, his government and their depressed country are now in real dire straits. This is a much worse position than in any time during the last five years, a period in which Greece repeatedly faced total collapse and was rescued by a troika of creditors (the European Union, the European Central Bank and the International Monetary Fund). Alas, today the economic, political and social Armageddon is there.

Tsipras himself is challenged by members of government and some heavyweights of his SYRIZA left-wing party. They press him to accept any offer the country’s creditors may make, and even ask him to withdraw his decision to hold a referendum on Sunday. After three days, voters are expected to accept or reject the latest offer the creditors made, with Tsipras urging for a resounding ‘no’ result.

Voting for what?

It turns out though that the creditors have withdrawn their last offer and the Greeks are about to vote on a non-existing proposal. As for the country itself, it’s financially suffocated, with the banks closed for at least one week until Monday 6 July and its citizens queuing day and night in front of the ATMs to withdraw €60 a day. And this is possible only if the machine is loaded with cash. It became apparent then that Tsipras cannot even deliver part of the pensions and the public sector salaries he had promised to protect from the ‘bad’ guys in Brussels and Berlin. Let’s take one thing at a time.

Selective default

Last Tuesday Greece defaulted on an IMF payment. On the same day the Standard & Poor’s rating agency downgraded the credit ratings of the all four Greek systemic banks to selective default. This is one step before a full default. On the same day at midnight, the support program of the three creditors, which financed Greece after May 2010, expired. During the past few months due to a flight of capital the country’s banking system was kept alive by the Emergency Liquidity Assistance (ELA) transfers from ECB. Last Saturday the ECB decided to freeze those transfers provoking the shutdown of all Greek banks and the introduction of capital controls. Currently the internal market functions if at all only with cash. By the same token the country’s international trade has come to a standstill.

There is no indication if the banks will be able to open on Tuesday 7 July, when the six days of the enforced bank holiday ends. The problem is that the ECB won’t resume the ELA transfers for as long as Greece is not under a troika program. As a result, the banks cannot reopen without the backing of ECB. In short, the country is in a state of limbo without any light at the end of the tunnel. The possibility of the introduction of a new national currency is so dreadful and administratively complex that cannot offer a tangible way out, at least not in the short-term. Let’s turn to the political agenda.

Political limbo

Unquestionably, the government and personally PM Tsipras are out of tricks. In his appearance in a public TV interview last Monday he asked for a resound ‘no’ result in Sunday’s referendum. He said a strong ‘no’ result of 60-70% would have enabled him to negotiate with the creditors from a better position. Only three days later his policy is disputed even by the vice- President of government, Giannis Dragasakis.

Tsipras’s strategy is now buried under the ruins of the banking system. He is offering everyday new concessions to creditors but one after the other all those proposals are being denied by the Eurogroup, the council of the Eurozone minister of Finance. According to a Wednesday report of the prestigious Financial Times newspaper, Tsipras is now ready to accept almost all the terms and conditions the creditors demand in order to restart financing the country.

Hardened creditors

Still it seems rather impossible that the creditors accept even the slightest alternation of their last week’s offer. Actually Jeroen Dijsselbloem, the President of Eurogroup, has observed that last week’s proposal of the creditors is now not enough and Greece has to accept more austerity and reform measures. On the same line of thinking, the German Chancellor Angela Merkel said that the creditors will now wait and see what the outcome of Sunday’s referendum will be and then reshape their offer to Greece.

As things stand now the troika of creditors, effectively guided by Berlin and the IMF, seems to have decided to let the country rot for some more weeks after the Sunday 5 July referendum, with the banks closed or even bankrupt and the economy completely dried of liquidity. In such an environment, the Tsipras government may finally capitulate and probably call for an early general election, only months after his January 25 win. This prospect will entail for the Greeks a very long and hot summer in every respect, economic, political and social. Greek society is already deeply divided between those who want to stay in Eurozone and those who prefer the introduction of a national currency, probably the new drachma.

In conclusion the five month-long bold Tsipras strategy in the negotiations with the country’s creditors has been proved disastrous for the country and personally for him.

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

Antitrust: Commission consults stakeholders on guidance for national courts when handling disclosure information

Asia’s plastic problem is choking the world’s oceans. Here’s how to fix it

European Parliament speaks out against “killer robots”

Finland must focus on integrating migrant women and their children to boost their contribution to the economy and society

UN experts urge United Arab Emirates to release terminally ill woman to live her last days ‘in dignity’

Nearly 180,000 displaced by northeast Syria fighting as needs multiply: UN refugee agency

The EU’s trading partners: US, China and the rest

The British are the most positive in Europe on the benefits of immigration

Parliament approves €500 million for schooling of refugee children in Turkey

The European Commission, European Investment Bank and Breakthrough Energy Ventures establish a new €100 million fund to support clean energy investments

Women vital for ‘new paradigm’ in Africa’s Sahel region, Security Council hears

4 ways blockchain will transform the mining and metals industry

Drone regulation is necessary to democratize the sky for humanity

What we know about the Wuhan coronavirus and urgent plans to develop a vaccine

Health spending set to outpace GDP growth to 2030

Costa Rica has doubled its tropical rainforests in just a few decades. Here’s how

Global Citizen – Volunteer Internships

Trade/Human Rights: Commission decides to partially withdraw Cambodia’s preferential access to the EU market

MEPs back EU partnership agreement with Armenia

Bolivia crisis: UN chief sends envoy to support peace, amidst renewed clashes

Bill Gates’ top 10 breakthrough technologies of 2019

EU–Canada Summit: strengthening the rules-based international order

Further reforms in Sweden can drive growth, competitiveness and social cohesion

Catalonia’s vote for independence and the power of symbols

Erasmus+: a turning point in the lives of 5 million European students

Lack of investment and ambition means Youth Guarantee not reaching potential

Wednesday’s Daily Brief: #NoTobacco Day, China’s economy, family farming, #ClimateAction

EU Emissions Trading System does not hurt firms’ profitability

The Khashoggi affair: A global complot staged behind closed doors

The Council of Europe adopts Recommendation on young people’s access to rights

Illegal fishing: EU lifts Taiwan’s yellow card following reforms

This Central Asian lake is a stark reminder of the impact we have on the planet

The world is getting angrier, according to a new poll

Meeting of top scientists underway to slow coronavirus spread

These are the world’s 10 most competitive economies in 2019

Industrial producer prices on free fall and stagnant output

Erdogan’s Turkey in dire straits for flip flop policies in the Middle East

Invisibility outside the closet: health as a right for all

Why the world needs the youth revolution more than ever

Opening – Parliament expresses support for victims of Fuego volcano in Guatemala

Larger species are more at risk of extinction than smaller ones – here’s why

Future Forces Forum: Prague will be hosting the most important project in the field of Defence and Security

UN chief welcomes ‘first concrete step’ in normalizing Eritrea-Ethiopia relationship

EU presses India for a free trade agreement

Will CETA be implemented after eight long years or it will be vetoed by the EU citizen?

Tax crimes: special committee calls for a European financial police force

The Parliament sets the way for the European Banking Union

Women ‘vital’ to peace efforts and ensuring long-lasting stability in Afghanistan

Inspiring medical students to choose primary health care

Privacy is a human right, we need a GDPR for the world: Microsoft CEO

Peace dividend palpable in South Sudan, but ‘grassroots’ are moving faster than elites, says Shearer

European Commission and International Monetary Fund strengthen cooperation to support sustainable development

Tools of asset development: Renewable Energy Projects case

FROM THE FIELD: Heeding the call for women’s rights around the planet

Better Regulation principles: at the heart of the EU’s decision-making process

Got the blues? Head for some green spaces

Ukraine-EU deal sees the light but there’s no defeat for Russia

Syria: ‘Violence, displacement’ and cold kill 11 infants ‘in the past two days’

MEPs call on EU countries to end precarious employment practices

Banks can fight financial crime. But we can’t do it alone

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