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Greece hopes for agreement by Sunday, as creditors keep the beat with the usual pressure

Negative signals and immense pressure have been the usual creditors’ modus operandi for the last five years. The usual operation tool, when talks between Greece and its creditors reach a dangerous curve and are short before reaching an agreement. While the Greek side expresses hope for an agreement by Sunday, the creditors keep on transmitting their monotonous “Pressure” signal on the MayDay frequency.

On Wednesday afternoon and after a meeting with the Greek negotiation team at the Finance Ministry, Prime Minister Alexis Tsipras said that the deal was around the corner and advised Greeks to close their ears to Cassandras.

Greek government sources leaked to the press that the Greek side – or the Brussels Group or both – had already started to draft the agreement.

But the country’s creditors were quick to put a wall in front of the Greek enthusiasm.

In an hour, German Finance Minister Wolfgang Schaeuble had jumped in saying that he was surprised to hear from Athens that an agreement was “imminent.” On the contrary he stressed that the negotiations between Greece and the Institutions had not gone that far.”

What was odd was that Schaeuble had given that interview some 3 hours before the Greeks had reported of the progress.

On Thursday, it was the IMF‘s turn to keep up the pressure speed. Christine Lagarde told German state broadcaster ARD that “things have moved but there is still a lot of work.”

EU’s Commission vice president Valdis Dombrowskis had already repeated that “progress was slow” and named a list of things that had yet to be settled between borrowers and creditors: labor market and pension reforms and the usual fiscal targets.

Thursday noon, Greek government spokesman Gavirril Sakellaridis told reporters

“target is to achieve an agreement by Sunday”

He described the several creditors’ statements as “an attempt to maintain the pressure on Greece.”

The ECB did its share in the game warning that “Default risk for Greece had increased.”

According to latest news coming from Brussels, the Brussels Group is currently negotiating on the pension and labor market reforms. Or the fiscal targets and the several Value Added Tax rates. Or all issues muddled up together. It is not important, after all.

What is important is an agreement before June 5th or let our creditors sit on their red loans to Greece. It’s a matter of approach. 🙂

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PS Let’s have a cup of coffee and enjoy the heavy spring rain in Athens 🙂

 

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6 comments

  1. I am afraid, the more pessimistic picture painted by the creditors might be more accurate. It is not just that the Greek government might be underestimating the amount of work and the process required to conclude and approve the agreement (possibly, because of a lack of experience). It is also not just that the Greek officials (Varoufakis and others) have been stating that “progress is being made” and predicting for a few months now that a deal will be closed in a matter days. I am afraid that fundamentally the narrative of the Greek and international sides, their understanding of what would constitute a positive, fair, or even just acceptable outcome are incompatible.

    In the eyes of the “institutions” a few years ago there was a reasonable agreement in place that spread the pain fairly: the previous private creditors had to take a haircut on their Greek debt holdings, the European taxpayers and IMF provided financing at much-better-than-market conditions (maturities, interest rates) providing Greece with time for needed structural reforms, and the Greek taxpayers had to ensure the new loans get paid off through a combination of austerity, future sustainable growth, better tax collection and privatization. From creditors’ point of view, the agreement was working (albeit slower than expected): the fall of the Greek GDP finally subsided in late 2014, and a sustainable economic growth (which would inevitably lead to job growth) would follow. However, the current Greek government broke off that agreement in the most confrontational way possible. It stopped following the agreed upon rules and tried to shift the risk of slower Greek economic growth and poor tax collection to the creditors. Moreover, it was forcing the Eurozone taxpayers (not just the wealthier Germans and Dutch, but also poorer Balts, Slovaks and Slovenes) to give up on billions of their euros (not just by subsidizing Greek loans, but also accepting a haircut on the principal). That crosses creditors’ red line.

    In the eyes of the majority of the Greeks, on the other hand, the old agreement was unfair and not worth following anyway (since it was simply not working — as evidenced by the stubbornly high unemployment rate). It condemned the country to unbearable pain for the next two generations and had to be rejected regardless of the risk that could entail. The creditors were characterized as “loan sharks”, conspiring to torment the Greek people into submission. The fight against them is a heroic deed (“David vs. Goliath”), a matter of national pride, independence, and rule of democracy. With a narrative like that, a Cold War-like threat of mutual destruction is not only justified; it is necessary as the only leverage Greece has in this just fight. Even reforms that might be good for Greece regardless of the creditors are to be put on hold, implemented in a limited way, or even rolled back to have more chips to trade in the negotiations. To ensure internal support in the struggle with the creditors, Tsipras has reinforced this narrative not only before the election, but since then. In addition, Syriza’s leftist ideology supported by voters’ yearning for the good old days defined its red lines protecting the public sector and the welfare state.

    It is hard to imagine an imminent compromise.
    It is hard to imagine a compromise

    • In your long bla bla you did not get round to giving even ONE reason why the creditors’ are right. You paint the creditors white, the Greeks black. Excuse me, this is boring by now. Fail!

      • The long argument I made was to support the point that a compromise is not imminent. The positions and even the narratives are fundamentally contradicting each other. Hence, a statement that an agreement can be reached in a couple of days is wrong.

        In my post I have not weighed on whose position / narrative is right.

      • Sunday came and went. There is no agreement.

        It looks like the creditors, who were skeptical about Greek government’s optimism were right 🙁

    • Giaourti Giaourtaki

      Tales:
      -Nothing was getting better and the Troika didn’t believe Samaras’ faked numbers, that’s one main reason for snap elections; that his numbers were wrong came out in April via official statistics, widely ignored by media.
      -Welfare states you will find in north/central Europe not in Greece – the number of unemployed who still get allowance already dropped under 100.000, that means more than a million are without any money.
      -Your “agreed rules” are a 48-pages e-mail sent to Troika by the former government on 29th of November, when it was already clear that there will be a new government.

      • @Giaourti Thank you for sharing this perspective. I appreciate your first point. As for the wellfare state: Maybe I should have used a different word. I was referring to the pre-crisis Greece, in which a lot of people were taken care by getting government jobs. Clientelism might be more appropriate term. Of course, Syriza took steps towards reviving the public sector.