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Greek government is trapped in the bailout talks with creditors

Greece is trapped in bailout talks with the creditors taking place in Brussels. The reforms list the Greek government submitted to the creditors is considered to be on “positive basis” but not sufficient enough. The lenders want measures with “stable performance and specific results”, that is austerity measures with immediate fiscal revenues like, mass lay-offs, VAT hikes also in food and medicines, privatizations, cuts in wages and pensions.

But the SYRIZA-led government is trapped between the lenders’ demands and the objections of leftist fraction in own party, it is trapped by the commitments of the previous government to the lenders. While the promises it made to its voters currently seem to be the less problem.

Creditors stuck to dead-end austerity

The Institutions insist on further austerity and cuts and put pressure for “pension cuts, wages decreases, overhaul in labor issues.” No to mention the creditors’ NAY to Greek plans like abolishing the Unified Property tax (ENFIA), or increase the tax-free annual income to 12,000 euro, or even higher, rehiring of laid-off civil servants, minimum wage increases and other promises made by SYRIZA before the elections.

Alternate Finance Minister Dimitris Mardas told media this morning, that German Chancellor Angela Merkel told Prime Minister Alexis Tsipras on March 23rd in Berlin that he had to proceed with “mass lay-offs and pension cuts.”

The creditors do not show willingness accept the Greek reform list that practically contains no “austerity measures” but target revenues collections.

They don’t accept the revenues estimations from the tax evasion measures and tax avoidance and other measures like increase Value Added Tax in islands like Mykonos and Santorini, property tax only to properties with big value and other measures the Greek government thinks to increase revenues.

However, for Greece’s government, pension and wages cuts are out of question and so are interventions in labor issues like mass lay-offs.

What it becomes clear at this point is that while the new Greek government tries to “make the difference” and approach the debt issue, fiscal gaps and debt repayment options in a austerity-relaxed way, the Institutions of IMF, EU and ECB insist in the old recipe of strict austerity. A recipe that has proven to have  failed so far.

Greece running out of money

The Greek proposals package has measures worth some 3 billion euro for 2015. An agreement with the creditors would unlock the whole or part of the last bailout tranche of €7.5 billion.

A disagreement would be catastrophic with Greece’ debt obligations for April to amount some 3 billion euro. The country needs to pay

€448 million to IMF (April 9th)

€1.4 billion in refunding 6-month T-bills (mature April 14th)

€1 billion in refunding 3-month T-bills (mature April 17th)

Another one to two billion euro would be needed to pay wages and pensions.

Last week a rumor claimed that the ECB had forbidden Greek banks to buy T-bills and keep on funding the government. That is the ECB has cut any financial lifeline for the Greek government.

Traps around the government

For the moment,  the gap between Greek government and creditors seem unbridgeable, the distance is huge.

So what happened to the Eurogroup agreement of February 2oth? Was it just a hole in the water? An ostensible agreement where on paper both sides agreed but in substance the Euro-partners had something else in mind, that is the continuation of old path of strict austerity?

The Institutions’ objections at the Brussels Group talks confirm this in a way beyond any doubt. In fact, the creditors demand the implementation of the commitments of the previous government as stated in the famous e-mail of Samaras’ Finance Minister Gkikas Hardouvelis.

In an 48-page e-mail sent by Hardouvelis to Troika on 29. November 2014, Samaras’ government was committed to proceed with further austerity measures.

The trick of the email was that

1. the e-mail was sent at a time when it was certain that the country was heading to early elections

and

2. the e-mail of the previous government holds the new Greek government in captivity.

KTG already pointed to this option in an article criticizing the creditors’ inflexibility during the Eurogroup of February 18th.

At the same time, PM Tsipras faces also an internal opposition with the Left Platform of Dimitris Lafazanis to urge for a rift with the “German Europe”.

Of course, if the voters wanted “rift with Europe” they would have voted in favor of the Communist KKE, right?

Creditors’ faked agreements

One and a half month later, we realize that Greece and the creditors are exactly at the same point despite the February 20th agreement and the seemingly good deals at the mini EU leaders summit with PM Tsipras on March 19th.

Now the creditors blame Greece for having done little or nothing during the last weeks. However, we realize that at the very end the creditors have not moved an inch away from their initial and stiff position of the non-stop and dead-end austerity.

Tsipras last card?

As the Brussels talks are at crucial point again and Monday is the last day of the talks before the Catholic Easter vacations, Prime Minister Alexis Tsipras has called for an extraordinary Plenary Session at the Greek Parliament with the presence of the leaders from all parties.

Alexis Tsipras is reportedly going to inform the Parliament about the negotiations talks, and ask the opposition to take position towards the governmental legislation work, the past and the future.

In fact, PM Tsipras is going to ask the support of the opposition as he faces a crucial dilemma: rift with the creditors or rift with the left fraction of his own party.

Rift with creditors could mean snap elections as the Prime Minister would need to refresh the public mandate for whatever Greece’s future would be.

Rift with the left fraction could mean that the Left Platform leaves the government and that the Prime Minister would need to proceed to a coalition with To Potami, for example, in order to keep the parliament majority. that would especially please Germany and the Social Democrats who have supported the small party of vague and fuzzy policies.

PS the blackmail pattern makes a lot of sense, right???

 

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21 comments

  1. The Greek government seems to be incapeable of understanding that a primary surplus, or at last a credible forecast of one (bolstered by facts and figures), is a mandatory prerequisite for maintaining a financial lifeline by the IMF, the Eurozone and the ECB.

    This is non negotiable and consensus amongst a vast majority of voters and their delegates in the Eurozone.

    Better you accept this sooner than later and stop this larmoyant blame game and finger pointing to dark foreing forces.

    Europe never was designed as a transfer union and it will never become one, so stop counting on that as well as geopolitics and historical aces up the sleeve.

    Instead of convincing the taxpayers of the creditor nations with a reliable reform concept, the Greek government decided to provoque them, in profound misinterpretation of the balance of power between creditors and debitors.

    Resolving this politically instead of technically was a profound mistake. – Which will cost Greece the Euro.

    Finally: try to image one single moment that Merkel, Schäuble, Dijsselbloem, Junker, Renzi, Rajoy Hollande and all the others really, really tried to help Greece to stay in the Euro – against the majority of their voters. One single moment. And imagine what this immature hooliganism of SYRIZA has done to this effort…

  2. Creditors’ requests are simply criminal: there is no economic sense in what they’re asking, doing what they want will plunge greece in an even deeper self-defeating recession spiral. The creditors are just trying to kill this government and Greece. I think a default and a virtual parallel currency must be tried. Alternative: euro exit.

  3. Chris writes: “Europe never was designed as a transfer union and it will never become one, so stop counting on that …”

    The EMU is a fatally flawed currency union: a transfer union would be the only way to save the Euro. If Greece leaves it’s the beginning of the EMU’s end (or: ECB forced in eternal QE). Austerity policies creditors are trying to force have been proved deadly wrong, as theory says, according to all macroeconomic textbooks.

  4. Chris

    If we are going to try to imagine, then try to imagine the results of mass layoffs and further wage cuts. Shall we shoot for 30 or 35% unemployment? 30 or 35% total shrinkage in GDP? Perhaps there should be a special unemployment tax on those not working? 1,000 Euro per year for being idle? That would create 1.3 billion in noncollectable taxes. After all, if we are going to live in fantasy land, let’s go whole hog.

    Thinking that more of the same failed steps is going to somehow produce a sudden turn around the the epitomy of lunacy.

    Why did the even institutions bother to ask for the new government’s proposals if they have no intention of deviating from the old ones? Talk about “trust issues”!

  5. Perhaps Mt Tsipras should learn to act like the institutions. On April 9th, he should tell the IMF, “We will not release the payment to you until you show us, to our satisfaction, how you plan to use the money. After all, it is currently the Greek people’s money, and we have a right to expect it to be used properly. Submit your proposal, and we’ll let you know if it meets our standards. What standards? Well, submit the proposal and we’ll tell you if it meets them. If it doesn’t, you can keep on trying.”

    • keeptalkinggreece

      Excellent idea! :)))

    • what do you mean its the greek peoples money? it is loans the government took, as in european taxpayer money.

      if you want to act arrogant and cool and act like you are the boss not the IMF, then fine just default and go drachma!

      • keeptalkinggreece

        there has been no bailout funding since August 2014. Therefore all payments made by Greece to IMF come form Greek taxpayers’ money.

  6. Rift with the left fraction could mean that the Left Platform leaves the government and that the Prime Minister would need to proceed to a coalition with To Potami, for example, in order to keep the parliament majority. that would especially please Germany and the Social Democrats who have supported the small party of vague and fuzzy policies.

    YES get realektions and get rid of the Greek NAZIS!
    this was Tsipras biggest mistake to go with them.
    every other Party (not golden dawn and KKE) would be bether!

    • keeptalkinggreece

      hm… considering opening a list where German will propose their favorite Greek parties and politicians.

      • it has nothing to do with the Germans.
        it is commen sence.

      • KTG, was hast Du eigentlich gegen die Deutschen ? In ein paar Monaten werden diese Deutschen dem wichtigsten, griechischen Wirtschaftsfaktor, dem Tourismus, finanziell wieder so richtig ” auf die Beine ” helfen. Dann kannst Du Deine Aversionen gegenüber den Deutschen wieder für ein paar Wochen ruhen lassen. Ihr solltet nur aufpassen, dass die Hoteliers, die Gastronomen, die Taxifahrer etc. auch wirklich die durch die Deutschen eingenommenen Steuern an den griechischen Staat abführen. DAS würde dem griechischen Staat wirklich helfen und nicht nur immer “hochintelligete” Sprüche hier los lassen. Think about it !

        • keeptalkinggreece

          I habe uberhaupt nichts gegen Deutsche. habe dort auch gelebt & gearbeitet. es ist halt die Arroganz und die rigorose Sparrpolitik ggen die Voelker Europas die ich nicht mag.

          • Chapeau vor Dir und Deiner Bildung, KTG. Du hast wirklich etwas aus Dir gemacht, worum ich Dich beneide. Ich habe im Hintergrund in vielen Deiner Kommentare auch ” so eine Art ” Arroganz erkannt. Diese ist mit Sicherheit in jedem vorhanden und wird von mir, genau so wie von Dir, verdammt. Nur, Du weißt doch aus eigener Erfahrung, was die Deutschen für ein komisches Volk sind. Und denen alleine diese von Dir monierte, rigorose Sparpolitik vorzuwerfen, ist nicht ganz fair. Sicher, Schäuble ist auch absolut nicht mein Freund und er hinterlässt,wenn er denn mal in den Container springt, auch den Deutschen ein schlimmes Erbe. Darüber darf man gar nicht nachdenken. Er alleine ist es doch gar nicht, der den Griechen das Sparen beibringen will. Es sind doch alle Eure europäischen Kreditgeber ! Sch. reißt das Maul am weitesten auf und sagt genau das, was die anderen denken. DIE sind aber alle zu feige ( vorsichtig ? ) den Mund aufzumachen, weil …….,- wenn sich Griechenland hoffentlich mal wieder einigermaßen berappelt – evtl. Chancen für irgendwelche Investitionen bestehen. Und die will man sich durch irgendwelche negativen Äußerungen nicht kaputt machen ! Die Politik ist halt eine Hure. Das alles ist Kapitalismus vom Feinsten. Hier in D schon lange und Euch in GR will man da auch hinbringen. Erfolg ist immer eine Frage der Zeit. Ich hör´ lieber auf, sonst kommt da noch ein ganzer Roman zustande. Toi, toi, dass Ihr bald aus dieser Sch…. rauskommt.

        • Ich möchte Special die Taxifahrer hervor heben!
          ich habe immer, nicht nur in Griechenland, Probleme mit Taxis.
          Aber wenn die Griechische Regierung es schaffen wird diese Leute (Arsch….) ihren Taxameter anzuschalten wird das Millionen bringen!

          • keeptalkinggreece

            da sieht man dass einer nicht in GR lebt. Taxi-Quittungen sind ein Muss seit 2-3 Jahren

            • Lieber KTG,

              Ich muss, leider, regelmäßig mit ein Griechisch Taxi fahren.
              Ich habe noch NIE eine Quittung bekommen!
              Ich muss auch IMMER kämpfen ( bildlich) das diese Leute ihr Taxameter einschalten.
              Wenn es eine Pflicht ist etwas zu tun ist eine Sache, ob es dann auch gemacht wird ist die andere.
              Wenn es keine Kontrolle gibt wird es, nach meine Erfahrung, nicht gemacht.
              Da kommt der Griechische Staat und seine Mitarbeiter ins Spiel.
              Wie dass im großen und Ganzen funktioniert müsstest du eigentlich aus eigene Erfahrung wissen.
              Das ist eine Mega Aufgabe führ Tjípras und co.

              Ich bin jetzt nicht in Griechenland.
              Ab ende April wieder, schauen wir mal was noch da ist.

        • es ist nicht in ein par Monaten, es sind nur noch 4 Wochen.
          und es gibt noch andere Touristen.
          vorallendingen die aus die Östlichen Länder die zu viert um eine Flasche Wasser hocken!
          wo der Wirt fragt, wollt ihr vielleicht was essen?
          Ja , vielleicht ein Ei?

        • Edward

          Most of us in Greece look forward to all well behaved, courteous tourists as welcome guests in our country. However, being expected to be gracious hosts is far different than being expected to be serfs to one’s guests. Do I detect a note of economic or touristic imperialism? Spending your money here does not in any way convey ownership.