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Greek FinMin to face the Eurogroup with 153 YES in Reforms legislation & anticipation that Debt Relief discussion starts

Finance Minister Euclid Tsakalotos was already in Brussels, when the Greek Parliament was voting to adopt the Pensions Reforms and new Taxation bill short after midnight. In order to avoid that even one vote is missing, Tsakalotos made use of the option to vote per letter. He was certainly happy to hear that all 153 SYRIZA-ANEL lawmakers voted YES, something that was actually expected. For the Greek economic team, however, the official seal of the Parliament was an essential weapon for the extraordinary Eurogroup meeting that convenes at 15:00 local time today, Monday.

In Tsakalotos’ dossier, there is also an “agreement in principle” with the European lenders on the issues agreed in summer 2015: the new privatization fund, the treatment of non-performing loans, indirect taxes.

In addition, the Greek economic team has reportedly also sent to the institution the Greek proposal for an automatic deficit regulating mechanism  as anti-proposal to IMF’s contingency measures worth €3.6 billion if Greece fails to meet the target of 3.5% Primary Surplus in 2018.

Greece aims at an agreement today that will lead to the disbursement of the third bailout tranche of estimated at least €5 billion.

But most of all, Greece is happy that the Debt Relief issue will be on the official agenda of the Eurogroup. Something that also Prime Minister Alexis Tsipras announced during one of his speeches in the Parliament on Sunday.

IMF representative Poul Thomsen who will attend the Eurogroup meeting is expected to bring the necessity of debt relief on the table. But German Finance Minister Wolfgang Schaeuble is insistent as well: first program review and conclusion of the program, then discussion on Debt Relief, a source of German Finance Ministry told the Deutsche Welle on Sunday. However, Schaeuble insists also that the IMF remains in the Greek program, so I assume, it will be up to Thomsen and Schaeuble to reach a compromise today – or not.

Merkel’s Social-democrat coalition partner, vice chancellor Sigmar Gabriel (SPD) said in an interview over the weekend, that “the euro group meeting on Monday should locate a way to break the vicious circle in Greece,” adding “we all know that this debt relief have to come sometime. It helps make no sense, in front of it to push once again. Absolutely wrong would be to Greece to cover now with new austerity measures.”

But what power does the SPD have to persuade Schaeuble change his policy?

Equally weak towards the German Finance Minister is the European Commission President Jean-Claude Juncker who said that “Greece has basically achieved its reforms goals and the eurozone partners will begin discussing possible debt relief.

Even if a discussion on the debt relief takes place today, it does not mean something specific like a solution to the issue. According to a statement issued by the Eurogroup, Discussions will focus on the comprehensive package of policy reforms and the sustainability of Greece’s public debt. “Both issues must be discussed in order to conclude the first program review and disburse further financial aid to Greece.”

European Stability Mechanism managing director Klaus Regling said in an interview to Italian Corriere Della Sera daily on Saturday “Greece is not close to any default. We are working to conclude the review and avoid problems of last year.”

 ‏@ESM_Press May 6
#ESM #Regling: Overall financial assistance to Greece by European partners & IMF is around €250 billion
@ESM_Press May 6
#ESM #Regling: The IMF participation issue is not really a question of funding for Greece but using IMF technical expertise

At the same time, Regling allegedly sent a letter to the Eurogroup expressing his disagreement to have Greek debt interest rates  adjust to the current low interest rates of the ECB.

A Debt Relief is not a “haircut” but extension of repayment and new set of the interest rates.

At the very end, we all know, though, that it is a matter of political decision and less an economic one. According to press reports, France and Portugal want a Debt Relief, Germany, Austria and the Netherlands do not. The rest of eurozone finance ministers would probably follow the EZ leader, Germany.

PS Aware of the bureaucracy of “institutions” aiming to delay things be done, and assuming that Schaeuble would agree on that, the best we can expect from the Eurogroup on Debt Relief is a mandate to establish a committee to look into Greece’s debt sustainability…

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3 comments

  1. Be prepared to realize that the use of fallacious reasoning, intellectual charlatanism and moral unscrupulousness for which Plato and Aristotle (rightly or wrongly) condemned the Sophists so many centuries ago in Greece has not died but has found a new home – the Eurogroup. I predict that after today’s discussions the term “immediately” will acquire a new meaning and span anything from “now” to “whenever.” The same can be said about the term “debt relief” which could mean anything from giving Greece’s debt a “haircut” (NOT) to playing with the figures so that on paper the debt seems to have been lowered while in reality it’s just been pushed into the background.

    • Agreed, but it can also be found in “NewSpeak” in Orwell’s 1984. To be fair to the Eurogroup, they didn’t actually invent this shit: its immediate precursor lies in UK government propaganda going back to Thatcher. It is now something of an art form in UK right wing politics, to invent names and phrases that imply the opposite of what is really meant.

  2. “When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
    “The question is,” said Alice, “whether you can make words mean so many different things.