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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. 

 

150211_Open_Europe_graph itemprop=

 

*  *  *

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.

*  *  *

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...

*  *  *

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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Sat, 02/21/2015 - 14:46 | 5812444 R19
R19's picture

No money on the line for '-1'? GUESS NOT. Or maybe you're a long term investor!

Sat, 02/21/2015 - 14:15 | 5812344 Dicey
Dicey's picture

The EU is overwhlemingly communist and Syriza are communist so they were always on the same side. If Greeks want an end to this only Golden Dawn will give it to them.

Sat, 02/21/2015 - 14:49 | 5812458 DutchBoy2015
DutchBoy2015's picture

Communist?  LOL Put down the crack pipe.  The USSA is .

Sat, 02/21/2015 - 14:28 | 5812387 falak pema
falak pema's picture

Yanis's whole stance has been one of an "outsider" from a university background telling the movers and shakers of Euroland that they were a bunch of crooked, crony politicans involved in an unsustainable scam. 

In that he was completely right as it was pure truth. But... as Fin Min of Greece he was NOW part of the club!

So that was a fatal mistake to then plead "reason" with these thugs as a new "insider" who tries to CONVINCE them that structural debt is NOT a liquidity problem. And that Greece was bankrupt and therefore its lenders --those banksta sharks--needed to take a HAIRCUT, as Grexit would be much worse for them.

Such OPEN language in front of world media from an INSIDER was heresy, to be expressed by a professorial "holier than thou" newcomer!

It made Schauble and Dieselbloom feel like covered in shit and of course as they ARE the power they reacted accordingly by pulling the plug on a bankrupt Greece. We were no more in rational debate but in psychodrama. Even Putin when he plays poker has "backup"; not Yanis! 

If Yanis had been a little more experienced in sham shamans and shoddy politics he should have understood that the last thing an Emperor wants to hear is : "you sir are naked" -- said by a court member in public! 

"Off with that guy's head" came Schauble's understandable knee jerk! 

And what fall back did Yanis have? NONE!

He was as  naked as the Emperor to propose plan B for Greece. He could not just walk away and start the Drachma printing press in a country which he did not control (These Syriza guys have no PROVEN experience to RUN a nominal democracy and a huge, corrupt and defeated bureaucracy; They still have to learn the ropes).

So its pot calling kettle : "you are naked". Not very game theory smart.

Whence the fall back to Monday trying to save face and placate an irate Schauble now arch enemy of heretic in Euroclub! 

Not very clever Yanis. You could have got much more from Euro group who are SHIT SCARED of Grexit if you had been less professorial and more machiavellian.

Its takes a "pseudo" thief to catch a real thief (or put the fear of God up his ass)....All you had to do is act more machiavellian and less honest professor! 

Sat, 02/21/2015 - 15:26 | 5812574 Tinky
Tinky's picture

Either that, or he's a hell of a poker player. We will see.

Sat, 02/21/2015 - 16:37 | 5812827 geno-econ
geno-econ's picture

Hope Yanis reads FP comments and on Monday includes in his reform plan a 600 Euro bonus for every Greek citizen in order to stimulate Greek import demand for German  and  European products and services.  Theoretically it would recirculate German surpluses but would  get a Grexit started real quick.   Just day dreaming for some amusement and fireworks on Monday

Sat, 02/21/2015 - 14:49 | 5812457 Ketsa
Ketsa's picture

If voting could change anything, it would be forbidden.

Sat, 02/21/2015 - 15:04 | 5812513 Jeepers Creepers
Jeepers Creepers's picture

Of course they did, this was always about money.  It was never about independence or changing the power structure.  The Free Shit Army was running out of free shit, and the socialists needed more cheese to keep buying votes.

 

The other option would have been everyone get real jobs and have a real economy.  That sure as hell wasn't going to happen.

Thu, 02/26/2015 - 10:49 | 5831115 TeethVillage88s
TeethVillage88s's picture

So, you never studied or thought about what sovereignty means?

You never thought about what independence for another country other than the USA would mean?

You never thought that it was both a sin and an international crime for the USA to put down Strikes or unions in another country?

You never thought it was a war crime or international crime for the USA to suppress democracy in another country or to interfere with elections or to assassinate their elected leaders or to train and send in rebels or opposing military to over through the elected government?

So you never heard of Self Determination?

You like Democracy for the USA, but not for Central America or South America or for the Caribbean?

You are basically saying, You are a Fascist. No people should be allowed to chose their future.

Wow.

Sat, 02/21/2015 - 15:05 | 5812520 Atomizer
Atomizer's picture

Have a problem, didn't see anything other than a 4 month extention. Show me the ECB loan agreement signed. Tag, you're it..

M83 - Hurry Up, We're Dreaming

Sat, 02/21/2015 - 15:33 | 5812592 Heavy
Heavy's picture

Valve!!!  Damn yous!

Sat, 02/21/2015 - 15:37 | 5812608 Victory_Garden
Victory_Garden's picture

Bah...humbug!

Sat, 02/21/2015 - 15:41 | 5812621 Hapa
Hapa's picture

Kind of disgusted with the whole thing really, more tired old can kicking.  Wake me up when the kettle starts boiling again, as it surely will.  In the meantime I'm taking a break from all the fake drama and hopenosis

Sat, 02/21/2015 - 15:45 | 5812636 Karaio
Karaio's picture

Colocaria UE, como barbas de molho ...

Um Governo Recém empossado Não Tem de Todos os níveis de Governança Mãos EM.

Ágora Recuar, momento Nesse, E sensato parágrafo CRIAR fôlego.

Aguardem uns meses, uma Coisa PODE Ficar feia.

Paciência em Política e hum dom.

Vide Putin na Ucrânia.

Dê um tempo para os caras imprimirem sua moeda.

hehe.

Sat, 02/21/2015 - 15:49 | 5812653 whirlybird rules
whirlybird rules's picture

Not a Communist, but since 1974, this looked like the 1st time, regular people wld have representation. Then the old boys explain to the new boys, they have no choice but to go along because it is their job to SAVE THE WORLD. The old boys will continue to do what they do best: DENY, DELUDE & DELAY. Meanwhile GR will continue to sink into an abyss. 

Sat, 02/21/2015 - 15:57 | 5812700 falconflight
falconflight's picture

Detroit also wasn't provided a infusion of debt revenue by Michigan without conditions.  

Sat, 02/21/2015 - 16:16 | 5812760 Theremustbeanot...
Theremustbeanotherway's picture

The Greeks are playing for time.  Only the Bankster fa**ots think they have folded.  Change is coming and Greece just have tos tay in the game.  

The Bankster scum have revealed their true fascist nature - this is all out in the open for all to see.  No more dodgy deals behind closed doors.

I'm confident the day will come when all the worthless useless produce nothing parasitical bankster tur*s and their sycophantic boot licking politician servants will be rounded up, tried for crimes against humanity and executed.I'm sure a long queue of volunteers is forming now to operate the guillotines...

 

 

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