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It turns out though that the creditors have withdrawn their last offer and the Greeks are about to vote on a non-existing proposal.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

Advertising

Advertising

Advertising

Advertising

Featured Stings

The EU Commission predicts a decimated growth in the next years

Deutsche Bank: the next financial crisis is here and the lenders need €150 billion from taxpayers

Catalonia’s vote for independence and the power of symbols

G20 LIVE: World Leaders in Turkey for G20 Summit. Global Economy will be discussed in Antalya

Brexit: when the hubris of one man can set the UK, the EU and the entire world on fire

Yes, together we can make a change! YO!Fest and EYE 2016

daniela-runchi-jade-president__

A Sting Exclusive: “Education in Europe, fostering skills development inside and outside the school system”

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

China invites the EU to a joint endeavor for free trade and order in the world

Landmark EU Parliament – ECB agreement on bank supervision

EU Council: The US airlines may freely pollute the European air

Hostages to a rampant banking system

Eurozone in trouble after Nicosia’s ‘no’

Fighting for minds of youth in Latvia

The Monetary Union drives Europe into dangerous paths, CoR demands an EMU of regional content

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

One more country to test the EU project: Kaczynski’s Poland

MWC 2016 LIVE: Intel focuses on 5G “beyond the Powerpoint”

Greece @ MWC14: Greek-born mobile champions at MWC 2014

Do the EU policies on agro-food smell?

EU Commission: Once in every 20 beef meals you eat…horse probably with drugs in it

G20 World Exclusive Interview: “The world, especially emerging economies and developing countries, require a more sustainable and quality development”, the Spokesperson of Japan underscores live from Antalya Turkey

EU’s social crisis and unemployment to deteriorate

Did Draghi ask the Germans to accept a drastic change of austerity policies?

The Eurogroup protects Germany and blames others

The British “nonsense”, the relaxed Commissioner and the TTIP “chiaroscuro” at this week’s Council

On Google antitrust case: “Let’s face it, some companies want to hurt Google and it goes as simple as that”

Appreciation of euro to continue

Teamgum @ TheNextWeb 2014

No end to Deutsche Bank’s problems: new litigations in the US and frailty in EU stress test

Commission Vice-President Rehn exaggerates Eurozone’s growth prospects

A Sting Exclusive: “Doing ourselves a favour”, Vice President Dombrovskis underscores that this time growth has to come from within the EU

Volkswagen getting away with it in Europe

EU: Divided they stand on immigration and Trump hurricanes

Is the European Banking Union an impossible task?

The ECB proposes a swift solution for SMEs’ financing

WEF Davos 2016 LIVE: “Chinese economy has great potential, resilience and ample space for policy adjustment”, China’s Vice President Li Yuanchao reassures from Davos

Marco Polo’s Dream

No agreement in sight on EU budget

ECB readies itself for extraordinary monetary measures defying Germany

A Sting Exclusive: “One year on from the VW scandal and EU consumers are still in the dark”, BEUC’s Head highlights from Brussels

Do you dare to go to China?

The West definitively cuts Russia off from the developed world

What happens when the Eurogroup decides to help Greece


Re-thinking citizenship education: bringing young people back to the ballot box

At last a good price for the Greek debt!

Who is responsible for public health? The tendencies and its benefits –or not– on Health Education around the world

Community Manager – 1289

MWC 2016 LIVE: BT chief aims to be at UK 5G forefront

Can We(esterners) ever understand (the) Chinese

Has Germany rebuffed ECB on the banking union?

Parliament votes reform for better European Co2 market but critics want it sooner than later

Royal Navy to unveil future surveillance and reconnaissance requirements next February in Rome

€5 billion of EU energy efficiency project money spent on “comfort”

An ECB banker wants to change the European social model

Tax evasion and fraud threaten the European project

Five years down the drain

ECB: Growth measures even before the German elections

Unemployment and immigrants haunt the EU; who can offer relief?

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

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