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It turns out though that the creditors have withdrawn their last offer and the Greeks are about to vote on a non-existing proposal.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

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

Governments adopt UN global migration pact to help ‘prevent suffering and chaos’

This massive project in Spain is the latest milestone in Europe’s solar power boom

Continuing incarceration of women’s rights activists in Saudi Arabia, ‘reprehensible’: UN experts

Ongoing insecurity in Darfur, despite ‘remarkable developments’ in Sudan: UN peacekeeping chief

Youth employment crisis easing but far from over

The jobs forecast is unsettled. It’s time for a reskilling revolution

How I met the Panda Woman

EU Commission: Germany can make Eurozone grow again just by helping itself

Imported and EU fisheries products should be treated equally

Worth going ‘extra mile’ for a new Syrian constitution, UN envoy urges

UN chief calls for ‘far greater support’ for Cyclone Idai response

EU Commission: The banks are not obliged to finance the real economy

The European Sting @ European Business Summit 2014 – the preview

Malta: investigation risks being compromised while Prime Minister is in office

Von der Leyen on Europe Day: What does Europe mean to me and why is solidarity more valid than ever

Black Panther’s ‘General Okoye’ joins the fight against gender-based violence

Parliament elects the von der Leyen Commission

‘Provocative actions and inflammatory rhetoric’ destabilizing Middle East, warns top UN official

How close is the new financial Armageddon? IMF gives some hints

Inspired by orange peel, this ‘plastic’ packaging is totally compostable

UN launches new project to address link between terrorism, arms and crime

We need to protect 30% of the planet by 2030. This is how we can do it

Cohesion Policy: EU invests €880 million to improve Poland’s railway system

‘Safe Eurobonds’: a new trick to betray the south euro area countries

The 2019 European elections: A pro-European – and young – electorate with clear expectations

Back to school: Schoolchildren to receive milk, fruits and vegetables at school thanks to EU programme

G20: Less growth, more austerity for developing countries

Why we need to rethink geo-economics to beat climate change

Why vaccines are not just for children

People are scared of artificial intelligence – here’s why we should embrace it instead

Developing countries should not be liable for emissions ‘accumulated throughout history’, key UN development forum hears

The Red Cross’s health chief explains how business must respond to coronavirus

Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace

Africa Forum aims to boost business, reduce costs, help countries trade out of poverty

SMEs are the most valuable partners. Here’s why

It’s not just the protests. Here’s how young people are helping the planet

‘Bring to life’ precious moments caught on film or tape, UN agency urges on World Day

The EU Spring Summit set to challenge austerity

NEC @ European Business Summit 2014: The Digitally Enabled Grid

Mirrored classroom display highlights scale of massive education crisis

Europe is designing satellites that ‘surf’ their way past space debris

European Business Summit 2014: The role of youth entrepreneurship education in EU’s Strategy for Competitiveness

In tech-driven 21st century, achieving global development goals requires closing digital gender divide

The mental domain in times of a pandemic

How regenerative agroforestry could solve the climate crisis

UN launches plan to promote peace, inclusive growth in Africa’s Sahel

COP21 Breaking News_03 December: Argentina Accepts KP Amendment

Central America: drought, resulting crop losses threaten food security of two million people, UN warns

Hospitals in Yemen attacked, disrupting healthcare for thousands of vulnerable civilians

EU funds must reach media and creative sector, say MEPs

Multiprofessional action against the indiscriminate use of antibiotics

The business case for investing in sustainable plastics

Eurozone: Even good statistics mean deeper recession

The EU Commission predicts a decimated growth in the next years

Friday’s Daily Brief: UN chief in China, counter-terrorism, updates from Bangladesh, Mali and Mozambique

This start-up made doing good a business priority – and flourished

Drug laws must be amended to ‘combat racial discrimination’, UN experts say

An introduction to ‘Eco-Medical Literacy’ and its importance in shaping expert medical professionals

Here’s how to make ‘value-based healthcare’ a reality

Alexis Tsipras against internal and external “enemies” in pursue of a two-phase deal now

More Stings?

Advertising

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