The Eurogroup meeting on Thursday ended for Greece as expected: highly stubborn creditors putting immense pressure on Greece to legislate austerity measures that will be implemented in after 2018 now. The finance ministers of eurozone demand with superabundant insolence from Greece what they would never do in their own countries: to present measures ensuring budget targets set for 2018 and the following years. And this despite the government objections as the Greek Constitution forbids such actions.
The creditors do not care. It is not in the logic of the technocrats of the International Monetary Fund or the small German accountants to care about constitutions and other democratic procedures. Seven years of bailout agreements have shown that constitutions and democratic procedures can be nicely stampeded in the name of economic crisis, austerity, debt repayment, the hijacking of the weak by the powerful.
Weren’t strict austerity measures imposed with sole presidential degrees and ministerial decisions replacing the Parliament? Wasn’t the first bailout Prime Minister George Papandreou ousted by the creditors in November 2011 and replaced by a non-elected prime minister who had the sole duty to implement the creditors’ demands? Wasn’t the result of the Referendum in 2015 simply ignored when creditors put the knife on the throat of Prime Minister Alexis Tsipras snarling Grexit now and at any cost?
Two years earlier, on 25. January 2017, SYRIZA was celebrating its huge victory in the elections. Two years later, on 26. January 2017, SYRIZA is at the same point his predecessor Antonis Samaras was when in November 2014 negotiations for the program review deadlocked. Prime Minister Samaras surrendered to pressure and decided to throw the hot potato of the second bailout in the hands of his successor.
Two years later SYRIZA finds itself in the same position: the second review of the third bailout program is stalling, creditors demand the adoption of more austerity measures. The blackmail mantra sound the same as many mantras before: adopt additional austerity measures like more pension cuts, lower tax allowance for employees and pensioners and crash any leftovers from labor rights or see the end of the bailout program.
These additional measures are required by the International Monetary Fund (IMF) as a condition to remain in the program. The European lenders have endorsed them unanimously as they did about the necessity of the Fund being part of the Greek program.
Eurogroup head Jeroen Dijsselbloem said on Thursday that the IMF’s presence in the program was “not negotiable at this point”.
The German Christian-democrats, the party of Chancellor Angela Merkel and finance Minister Wolfgang Schaeuble, went even further and threatened clearly: Without the IMF, no German aid for Greece.
Christian von Stetten, CDU MP and businessman, told economic newspaper Wirtschaftswoche that if the IMF considers the Greek debt unsustainable then there should be no more financial assistance for Greece. “If the IMF leaves, Germany should leave too.”
What the 46-year-old CDU hardliner von Stetten did not bother to mention was that the IMF considers the Greek debt as “unsustainable” because of the long-term 3.5% Primary Surplus target von Stetten’s party and Schaeuble imposed on Greece in the third bailout agreement.
But this is peanuts for populist von Stetten, a fierce supporter of Grexit, temporary as Schaeuble proposed or permanent. However, it is also indicative for Schaeuble’s stance in the review negotiations.
According to reports, Greek finance minister Euclid Tsakalotos went to Eurogroup in Brussels with two letters outlining proposals for the program review. “But creditors said they were insufficient. As a consequence, the creditors’ experts can still not go back to Athens to prepare the second review agreement.”
They can come and go and play with time and the Greek government.
The creditors’ formula is clear:
Without additional austerity measures and without the IMF there is no conclusion of program review.
No conclusion of program review means no new bailout tranche to Greece.
KTG wrote on Thursday, that the IMF cannot decide about its participation in the Greek program before the meeting of the board of directors on February 6th and before the new US administration of Donald Trump clearly unfold its position to the future role of the IMF.
What will the Greek government do?
Given the circumstances, there seem to be two options for Greece’s government:
Capitulate to creditors and accept their demands
Raise the revolution banner, snub the creditors and go for early elections. A honorable exit, so to say. But early elections is also a form of capitulation as Greek voters would most probably send the left-wing government home – blame the pressure campaign and the promises of major opposition party New Democracy.
The option of a Referendum would trigger a loud laughter globally.
There might be a third option of which I am not aware of.
Having closely followed the Greek economic crisis, the bailout agreements, the countless meetings of the Eurogroup and the series of asphyxiating tough negotiations for seven years, I never saw the creditors to have stepped back an inch from their demands.
The Budget Office of the Greek Parliament issued a report on Friday in which it warns either conclusion of the program review in reasonable time or a fourth bailout in 2018.
“The conclusion of the review in reasonable time will enable the participation of the country to the Quantitative Easing of the European Central Bank” the report writes noting positive development in restoring economic growth rates in 2016, unemployment decrease and achievement of Primary Surplus higher than the year target.
If the review conclusion fails, “Greece will need to borrow again and this will risk a fourth bailout,” The Budget Office stresses.
A review conclusion, yes, but at what economic and political cost.