How Greece Folded To Germany: The Complete Breakdown

Tyler Durden's picture

Having, as we previously explained, been given 'just enough rope' by the Germans, we thought it worth looking at just what Greece capitulated on (or perhaps a shorter version - what they did not capitulate on) and how Tsipras and Varoufakis will sell this to their fellow politicians... and most of all people.


As OpenEurope explains,

What points has Greece capitulated on?

1. Completion of the current review – Greece has basically agreed to conclude the current bailout. Any funding is conditional on such a process: 

Only approval of the conclusion of the review of the extended arrangement by the institutions in turn will allow for any disbursement of the outstanding tranche of the current EFSF programme and the transfer of the 2014 SMP profits. Both are again subject to approval by the Eurogroup.

This is a clear capitulation for Greek Prime Minister Alexis Tsipras, who said the previous bailout was “dead” and the EU/IMF/ECB Troika is “over”. 

2. Remaining bank recapitalisation funds – Greece wanted this money to be held by the Hellenic Financial Stabilisation Fund (HFSF) over the extension period, and possibly be open for use outside the banking sector. However, this has been denied and the bonds will return to the EFSF, although they will remain available for any bank recapitalisation needs. 

3. Role of the IMF – The Eurogroup statement says, “We also agreed that the IMF would continue to play its role”. Again, Greece has given in on this point and the Troika continues to exist and be strongly involved in all but name. 

4. No unilateral action – According to the statement, 

The Greek authorities commit to refrain from any rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions.

In light of this, a large number of promises that SYRIZA made in its election campaign will now be hard to fulfil. In the press conference given by Eurogroup Chairman Jeroen Dijsselbloem and EU Economics Commissioner Pierre Moscovici, it was suggested that this pledge also applied to the measures which were announced by Tsipras in his speech to the Greek parliament earlier this week – when he announced plans to roll back some labour market reforms passed by the previous Greek government. 

5. Four months rather than six months – Greece requested a six-month extension, but the Eurogroup only agreed to four months. This is a crucial point: it means the extension expires at the end of June. As the graph below shows, Greece faces two crucial bond repayments to the ECB in July and August which total €6.7bn. This is a very tough hard deadline. There is limited time for the longer term negotiations which will take place – provided that a final agreement on the extension is reached. It is very likely we will be back in a similar situation at the end of June. 


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Has Greece secured any wins?

Greece has received a couple of small fillips in the wording: 

The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.

This suggests that Greece may, during this year and the extension in particular, get more fiscal leeway. As we predicted many times, this would manifest itself as a lower primary surplus target. A small victory which may provide a bit of temporary breathing space for the government. In practice, though, it was already looking difficult for Greece to meet its target this year given significant shortfalls in tax revenue. 

Greece also managed to get the word “bridge” into the statement, and a specific promise to discuss a fresh programme and approach: 

This extension would also bridge the time for discussions on a possible follow-up arrangement between the Eurogroup, the institutions and Greece.

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What happens now?

As was stressed in the press conference, Greece will on Monday “present a first list of reform measures, based on the current arrangement”. Moving forward from this agreement, which is still largely in principle, will be conditional on these measures being judged as sufficient by the EU/IMF/ECB as a step towards completing the current bailout. 

Once that is confirmed work will begin on getting the “national procedures” in place, so that all the necessary parliaments (such as Germany and Finland) have approved the extension by the end of next week. 

In the not too distant future, discussions will begin on the “possible follow-up arrangement”. As we outlined in extensive detail here, there are a huge amount of differences which need to be resolved. The crucial ones being labour market and pension reforms, as well as debt relief. Chances of an agreement remain unclear, but we would expect Greece to struggle once again to get what it wants. 

Finally, the Greek government has to return to Greece and sell what is almost an entire capitulation to its own MPs (some of whom would have rather left the Eurozone than abandon their aims), its coalition partner, and the public (which has strongly supported the hard-line stance). We got a taste of this in the presser, when Finance Minister Yanis Varoufakis said: 

From the very first day, we refused to see these negotiations as a zero sum game.

We’re beginning to be co-authors of our destiny.

The Eurogroup statement is a good example of ‘constructive ambiguity’ on primary surplus targets.

I’m pleased to report that our commitments are commitments we wanted to make anyway.

Focusing on the longer term and selling the openness of the negotiation as an escape from the current programme. This may or may not be true, it is in the end a negotiation. 

Read More Here...

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As we said yesterday,

Greece has folded this hand but the game of poker continues. Greece is now short stack and living hand to hand (day to day). It continues to be in a very tough position and how the evaporation of the vision which SYRIZA sold at the election is a crucial and potentially explosive unknown.

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stinkhammer's picture

this is what it feels like when you fuck a stranger in the ass, Larry

whatthecurtains's picture

Austerity and the Troika still exist and will continue to do so.   So it is written... so shall it be

zeropain's picture

can kicking gets old but they been doing so long they are addicted.  but what happens in four months when it is worse conditions as deflation kicks in.  the drama continues...

the important part is "4. No unilateral action – According to the statement"

as that is reliquishing sovernty, which they said they were dead against.  so we shall see true colors as this issue is explained to the greek people.

ZerOhead's picture

Speaking of Greek sovereignty...

The government of Great Britain has finally agreed to the longstanding Greek government request to reunite the Elgin marbles with the Parthenon by announcing an offer to buy the Parthenon for 50 cents a pound and ship it to the British Museum in London...

flacon's picture

"TIME" the only asset that central planners can not control.

Antifaschistische's picture

Let the Greek people vote on the deal!!!

Self-enslavement's picture
Self-enslavement (not verified) Antifaschistische Feb 20, 2015 7:47 PM

They already did, they voted for another group of criminals acting as saviors. The real deal is in prison. Golden dawn will rise again. In the mean time, I say they start hanging politicians and bankers.

Whoa Dammit's picture

The Greek people will just get stuffed chock full of SSRIs and opiate pain killers just like the USSA population, so that nothing will happen to the elites.

COSMOS's picture

Greece folded because the Eurokrauts shoved millions into Swiss bank accounts of the new Greek politicians in power as well as deeds and keys to Mediterranean ocean side villas in Spain.

Mountainview's picture

Wait for Mondays news...and even then extention for 4 month doesn't mean the problem is solved.

COSMOS's picture

Just as in ancient times, there were Greeks that took Persian Empire troika money and fought against the interests of fellow Greeks, in some cases this was substantial numbers.

847328_3527's picture

It must taste like stale moussaka.

BaBaBouy's picture

The Greek Sheeple Just Got Handed To Them A NEW Empty Dried Bread Sandwich...
Here, Enjoy, We Will Have More For You In 4 Months...

new game's picture

4 months to forget about this crap. 4 months to prepare- both them and i or us.

6/28/15 or before redux xx, same crap different tyme. moar hope and change...

ebworthen's picture

My bet is that Tsipras is trolling the ECB and the Germans, giving them some bait and time to sink the hook and reel in the big one.  The big one being default and Grexit.

I'd guess the conversation in Greece will be like this:  "Psst! (whispering) get your money out of the banks while the ECB is providing cash and convert it to Gold and Silver...pass it on!"

new game's picture

waiting for the great downdraft. huge sucking sound of fiat going into a black hole vortex. it all starts as alittle deflation here and a tad there. then it slowly gain momentum as moar is printed fueling the great voooosh into the vortex of collapse...

unemployed's picture

 My wishful thinking also.   The time to set the hook may be only 72 hours.   When Tsipras goes back with nothing and tells the German bankers,  see I told you so,  our last offer was the best offer, not this POS you are using for cover.


smlbizman's picture

shut the fuck up donny, that wasn't very dude like....

roadlust's picture

A "market based solution!" 

new game's picture

logged it to be a dick and say, no suprise. many down votes on my comments, but once again politicians are politicians. know, understand and never get optimistic of their promisses of doing the right thing. they are the enemy.

and this is far from over. eventually the right things will happen, but unfortunatly to the peril of the majority. another sad day for the majority.

not happy, but predictable...

DeadFred's picture

This thing was going to end in collapse ot war. The Greek chose radiation for all. Oh well, on a long enough time line...

Radical Marijuana's picture

How appropriate that your handle is "DeadFred."

It is dismal to think that once upon a time looking at the stars was encouraging ... now the certainly of death on a long enough time line is the only encouraging thought that is rationally possible to entertain.

847328_3527's picture

If you really want to get depressed take a stroll thru your Merikan local mall and see what's growing there.

new game's picture

interesting thought. my take is "i will deal with the zero hedge motif on my terms"

they came for you and i had my gun ready for the knock, knock. no knock knock.

great, another day to enjoy...

HardAssets's picture

You can announce any damned thing you want -

the question is how that will play out among the people in Greece.

Like Iceland ?

We'll see.

winchester's picture
winchester (not verified) stinkhammer Feb 20, 2015 5:55 PM

we told ya all, for months, for years, they cannot grexit,    if you thinked about it, you are fucked as fool... they HAD to bend so circus keep going....

they  take money for themselves and then lie to their own population, if they do not, their own families get hurt/killed, this is sparta, this is how it works... the only way to  break the leash is NUKE.


you do not cut the USSA rope as you want, who the fuck you think you are....


of course i'm sad and disapointed as many ZHers... but..heeeeey....  stay on couch with ebt will never make revolution to come bro... youknowwattamean...

as long as lazy ppl prefer drip to fight...  any speaking is pointless.

dirtyfiles's picture

they had the option to go with BRICS

why they wast it is hard to understand

Vigilante's picture
  • I think the Greeks played for time
  • Come November podemos might win in Spain
  • A UKIP win in May willa lso work in their favour.
  • a rebellion by more southern states -against Germany- is a question of time.
  • The Greeks just need to hang in there as long as they can and hope that change comes..
Father Lucifer's picture

This flip-flop could also damage the credibility of the other anti-() parties.

winchester's picture
winchester (not verified) Father Lucifer Feb 21, 2015 2:34 PM

there is no anti party.. it is  total bluff only to get some % of vote from population to get a slot in the circus to get some money.


when you gain acces to new world, you never look behind.


 they will humiliate their population like any other president in the world. do not be fool by beeing full of dreams.... illusion are dangerous because they have no flaw...


this is a full go WEST vs EAST. it will take decades, and finish in war, a solid one, a nasty one, this is the case with the money, when the money will worth nothing, the only way to  shut up the opponent is to kill him.


get it written in paper on the fridge guys, some nice skilled kill will occur over the years.... in both side.

if you think  de margorie with total was an accident... then, keep dreaming, good night... but reality is... you have your life, live it just as you want it to its best, and  fuck you and shut the fuck up and die in the corner. not happy, sue 'em...if you can... you will not come to tribunal alive for the 1st day.


this is not the same world. we live on same planet, but like photoshop, many layers, and a bottom layer cannot draw on the upper ones.


one more time, be happy in the lower layer living your life just the best you can, until the overall draw become unreadable of complexity and the alt+W  without saving comes to play.


grexit... rofl....

garypaul's picture

LOL you just said hope and change.

InvalidID's picture


 I wish I could upvote this more... That's fucking fantastic!

zeropain's picture

what comes out of agreements don't matter.  they have always agreed to stuff, its about what they can and will do.  would not be more prudent to prepare four months for a big shift like your monetary currency especially when your in mist of a bank run.  if the EU thought greece will follow up with the plan then why shorten the term from six months to four. 

garypaul's picture

Why would they want to join a bunch of Third World countries? (sure there are rich people in the BRICS but it's not so good for the average person)

eatthebanksters's picture

More like when a stranger fucks you in the ass...

zorba THE GREEK's picture

Unless you have played poker with Greeks, it seems the Greeks have folded.

This game is just getting started, as you will see next week. First, you need to 

keep the sucker in the game by making him feel he is winning, then when the

pot is full of cash, you grab the money and run/exit.

Eternal Complainer's picture

I hope youre right.
Unfortunately i lost faith in a grexit as soon as they began to negotiate.
Its the tell.

new game's picture

never forget the night i had a horseshoe up my ass. i could win no matter what. once you win on real hands you own the table if played right. i had so much of everybodies cash i was getting worried about just getting the fuck out of there. some of the people playing were ex cons. it was dicey, but i also knew they play for keeps and understand loosing... true story. will never happen again. bluffing is one thing but ya gotta have some face. greece just doesn't have a jack...

NoTTD's picture

No, this is what it feels like to be the stranger.

garypaul's picture

It seems that democracy is really nothing more than an opinion poll: no actual action will result from it.

whatthecurtains's picture

Germany can never let a group like Podemos win in the Spanish election.    Better to kick Greece in the teeth then deal with that nightmare.

Vigilante's picture

Germany doesn't have the power to stop PODEMOS winning

They will try though

H. Perowne's picture

What good little doggies they are! Have a treat Yanis.

Thirst Mutilator's picture

I stick by my earlier analysis of the foto. Schaeuble flashed the CRIP sign & Yanis folded.


"If u ain't BLU then u ain't TRU"

saltoafronteira's picture

Let's wait and see, dont hyperventilate...Greece needed time. It got it.

whatthecurtains's picture

Yeah is that how Tsipras is going to explain it to the Greek people?   The Troika and austerity have not ended.  Nothing has changed for the people on the street.

nidaar's picture

At the end of the day, "what difference does it make" whether 300 billion or 350 billion the debt is? As long as they won't / can't pay it, what exactly is lost?

Greeks do not want to exit, they want free Euros. That's the only reason they want to be in. They got what they want / deserve...