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Greece drops “debt write-off”; “Somersault!” cheer some gloating Greeks

Greece said to delete the debt write-off proposal from its negotiation list and proposed a debt swap instead. Finance Minister Yanis Varoufakis told about 100 financiers in London on Monday, that Greece would seek to swap some Greek debt owned by the European Central Bank and the European Financial Stability Facility for the new securities.

The news was leaked to the press by one of the participants in the London meeting.

“Speaking to about 100 financiers in London late on Monday, Finance Minister Yanis Varoufakis outlined plans to swap some Greek debt owned by the European Central Bank and the European Financial Stability Facility for the new securities, according to a person who attended the meeting and asked not to be identified because they weren’t authorized to speak publicly. Varoufakis indicated that the move would allow Greece to avoid imposing a formal haircut on creditors, the person said.” (Bloomberg)

Yanis Varoufakis revealed to Financial Times  the government new plans “for ending the confrontation with its creditors by swapping outstanding debt for new growth-linked bonds, running a permanent budget surplus and targeting wealthy tax-evaders.”

“He told FT that the government would no longer call for a headline write-off of Greece’s €315bn foreign debt. Rather it would request a “menu of debt swaps” to ease the burden, including two types of new bonds.

The first type, indexed to nominal economic growth, would replace European rescue loans, and the second, which he termed “perpetual bonds”, would replace European Central Bank-owned Greek bonds. “(full article Financial Times )

A little later Varoufakis issued a further explanation saying:

“If we need to use euphemism and financial engineering tools to pull Greece out of the debt slavery community, we will do it. However the bottom line is one. The Greek public debt will become sustainable, the prospect of real growth will open and the Greek people finally breathe. The government and the Finance minister will not step back, not matter how our determination saddens some.”

The change of course of Greece’s new left-wing coalition government came after the strong opposition from Greece’s EU partners and creditors, who rejected in one voice the “debt write-off” option.

In less than a week after they took office, Prime Minister Alexis Tsipras and Finance Minister Yanis Vasroufakis launched a dynamic negotiation campaign on Greek debt caughting everyone by surprise, the Greek opposition included.

After the news from London, national and international mainstream media started to talk about Greece abandoning its positions, with gloaters cheering “Greece’s U-turn!”, pretending not to knowing how negotiations and bargain are done.



Greeks! Oh these Greeks!

Especially gloating appear the Greek media and members of the previous coalition government, with Nea Dimokratia writing “somersault” with capital letters and secretly or openly wishing that SYRIZA fails.

“From hard rock and continuous promises SYRIZΑ comes down to …reality,” a close aide of former PM Antonis Samaras told HuffingtonPost.

This morning I saw ex ND-Minister Panos Panagiotopoulos saying to Skai TV, “of course, we want the best for Greece, but we do not want the country to be humiliated,” if Syriza does not succeed in debt negotiations.

ND spokesman Kostas Karagkounis said in a television magazine “Only a few days after the elections and before the government officially announced its program, Tsipra – Kammenos government through talkative Varoufakis confesses unequivocally that: First, debt write-off is no longer on the table, withdrawing from what it said until today. Secondly, that it will honor its election promises.”

Of course, a success in SYRIZA’s negotiations with its creditors would irretrievable expose the previous governments of both Nea Dimokratia and PASOK, who immediately forgot their pre-elections promises one day after the June 2012 elections.

Former FinMin and deputy PM Evangelos Venizelos, leader of PASOK, told Monday night on Enikos magazine that ” I once threw the Troika out of my office.” That was end of August 2011, if I remember well. It was interesting to see that Venizelos tried to keep distance froom PM Samaras, even though he was his coalition partner since June 2012.

Another interesting phenomenon on Greek mainstream media landscape is that, while they were touching ND and PASOK politicians with silk gloves all this time, they now dig deep when it comes to question SYRIZA ministers.

Indicative are some titles on Greek websites, such as “Cold-Shower for Varoufakis after meeting with French FinMin“, “Athens Stock Exchange skyrockts after  Varoufakis ends haircut”, “Double somersault by Varoufakis,” “Another somersault for the debt.” that have been flooding the Greek internet since Monday.

Government spokesman Gaviil Sakellaridis told private Skai TV on Tuesday, that

“there is no U-turn, no somersault,” and that “the government will remain stuck to its position for a haircut of part of the debt.” He stressed that Varoufakis referred to the “technical issues that aim to make Greek debt sustainable and to limit the burden on Greek citizens.”

With all these political winkers and gloat,  we seem to forget the simple: that one goes to negotiations with maximal proposals and then starts to reduce the check list….

That there are opposition politicians wishing the new Greek government fails is … if nothing else #pathetic and hard to understand.


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  1. “That there are opposition politicians wishing the new Greek government fails is … if nothing else #pathetic and hard to understand.”

    No. This is easy to understand: it’s politics. And you make the very wrong assumption that the main goal for previous governments was to improve the welfare of the Greek people. Their main goal was to stay in power, fill their pockets and protect their cronies.

  2. They are becoming more realistic and they are blinking. It is good both for Europe and Greece. I hope they will not realize their promises (many of them are not realistic) and that they will get some debt relief. That what Varoufakis suggests – less obligatory primary surplus – seems very reasonable. There will be a little more money in the budget for pensioners and other groups of society in such a case – which means less austerity. In any case, it does not look crazy anymore.
    PS. Of course, politicians must lie at least a little. If they did not lie, nobody would elect them.

  3. Some UK paper had an EXCELLENT article on what would happen a few days ago. They said that Germany will NEVER accept ANY write down of the Greek debt. They would accept 100 year bonds @ .2% interest before allowing 1 single Euro to be forgiven.

    Looks like then “nailed it” perfectly.