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It turns out though that the creditors have withdrawn their last offer and the Greeks are about to vote on a non-existing proposal.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

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

The sustainable fashion revolution is well underway. These 5 trends prove it

Manufacturing is finally entering a new era

Tech must embrace teamwork to transform the world

We need to rethink cybersecurity for a post-pandemic world. Here’s how

‘Severe’ new US asylum restrictions will put vulnerable families at risk, UN refugee agency says

Macron has the deputies but not the people’s consent for his far reaching reforms

COVID-19: lessons from Italy on public-private healthcare procurement

Global aid needed for healthcare

Refugee crisis update: EU lacks solidarity as migration figures drop

The Commission breathless behind the horsemeat scandal

OECD presents analysis showing significant impact of proposed international tax reforms

UN calls for funds to ease ‘deteriorating’ humanitarian situation in Gaza and West Bank

As a rising global power, what is India’s vision for the world?

World-famous cultural institutions closed due to coronavirus are welcoming virtual visitors

Refugee crisis update: EU still lacks solidarity as Hungary and Slovakia refuse to accept EU Court’s decision

A Sting Exclusive: “eHealth can change many dimensions of how the healthcare area functions”, Polish MEP Michal Boni underscores from Brussels

YO!Fest back in Strasbourg for the 2nd edition of the European Youth Event – 20-21 May 2016

COVID-19 has hit Black Americans hardest. Healing this divide would lift the nation

Fear casts again a cold, ugly shadow over Europe; Turkey sides with Russia

COVID-19 vaccination campaigns and their challenges

4 fixes for equipment supply chains before the next COVID-19 waves hit

EU and Japan select first Erasmus Mundus Joint Master Programmes

Disaster Medicine in Medical Education: the investment you just can´t afford to ignore

Parliament’s proposal to reinforce flagship programmes is worth 39 billion euros

European Union: From financial consolidation to deeper political division

Knowledge is power: why the future is not just about the tech

Eurozone: New data show recession and debt closer to explosion

UN chief ‘deeply concerned’ by military escalation in northwest Syria

MEPs adopt plan to keep 2020 EU funding for UK in no-deal Brexit scenario

London wants to treat violent crime like a disease

Terrorist content online should be removed within one hour, says EP

Internet milestone reached, as more than 50 per cent go online: UN telecoms agency

It’s time for financial services to embrace the Fourth Industrial Revolution. Here’s why

Does upgrading our minds mean losing the spark of genius?

Commission launches initiative for more sustainable cocoa production

Are the G20 leaders ready to curb corporate tax-avoidance?

The pandemic’s effects on US jobs in charts

Antitrust: Commission provides guidance on allowing limited cooperation among businesses, especially for critical hospital medicines during the coronavirus outbreak

It takes far too long for a rare disease to be diagnosed. Here’s how that can change

We must stop choking the ocean with plastic waste. Here’s how

The climate and COVID-19: a convergence of crises

Getting African Women into the Boardroom

Why Sweden’s cashless society is no longer a utopia

MWC 2016 LIVE: Orange targets VoLTE and Voice over Wi-Fi; strikes Google partnership

Will the three major parties retain control of the new EU Parliament?

UN rights chief ‘extremely concerned’ over deadly crackdown on protesters in Iran

Food supply chain: A step closer to ending unfair trading

“We have to do a better job of creating alternatives to violent extremism”, US Secretary of State John Kerry from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

A Wholesome Health Care for Transgenders: Sex Reassignment Surgery

What makes America the world’s most competitive economy?

Migration and rule of law on next ACP-EU Parliamentary Assembly agenda

Here’s what global progress on COVID-19 vaccination looks like

Berlin wants to break South’s politico-economic standing

UN expert condemns new sentence for jailed Venezuelan judge as ‘another instance of reprisal’

Your recycling actually gets recycled, right? Not always, says this report

EU-Russia relations: the beginning of a warmer winter?

How COVID-19 shows the urgent need to address the cyber poverty gap

High-tech or ‘high-touch’: UK survey gives clues to the jobs of the future

This new way of understanding disease is changing medicine

Endocrine disruptors: A strategy for the future that protects EU citizens and the environment

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