This page has been archived and commenting is disabled.
Tsipras Sticks To "Red Line" Rhetoric Cornered By Party Radicals
Wednesday evening’s “high level” meeting between between Greek PM Alexis Tsipras, Jean-Claude Juncker and Jeroem Dijsselbloem came and went with little more than a promise to keep talking, in what has become a familiar scene for those glued to the Greek drama.
For now at least, Tsipras appears to be sticking to his party’s so-called “red lines” around pension cuts and a higher VAT, a stance that is apparently incompatible with the prepackaged deal prepared for him by Merkel, Hollande, Junker, and Draghi on Tuesday. Greece presented its own proposal on Monday evening prior to an emergency meeting in Berlin and it now appears creditors may actually have to read that draft if they hope to stick to the idea that Tuesday’s troika offer truly did not represent an ultimatum to Athens. Here’s more via Bloomberg:
Tsipras said demands by the euro area and the IMF for cuts in the income of poor pensioners and increases in value-added tax on power are unacceptable, highlighting what have been red lines in Greece’s stance since his anti-austerity Syriza party swept to power in snap elections in January.
“Ideas like cutting benefits for low-income pensioners, or raising the VAT rate for electricity by 10 percentage points, can’t be a basis for discussion,” he said...
“There was a constructive will from the European Commission to reach a common understanding,” he said.
(Tsipras in Brussels on Wednesday)
Greece has looked to the commission for support to dilute the austerity-first formula that’s underpinned two Greek rescues totaling 240 billion euros since 2010. This has led to clashes with creditors who say such bailout conditions have worked for other countries such as Ireland now out of aid programs and Greece should get no special treatment.
Creditors want the targets for the primary budget surplus - - the budget balance excluding interest payments -- to be 1 percent of gross domestic product this year, 2 percent of GDP in 2016, 3 percent in 2017 and 3.5 percent in 2018, said the Greek official, who called these proposals a “good basis” for further deliberations on the matter.
Tsipras said both sides were “very close” to an agreement on the targets for the primary surplus.
In other words: things are going nowhere very fast.
Barring some manner of end-around whereby Athens is able to borrow from some as yet untapped source of funds, Friday’s IMF payment will almost certainly be missed (although some reports indicate the government still claims it has the cash). This was largely expected. Given Greece’s dire financial position, it seems reasonable to assume they will take any opportunity to buy time and the bundling option (whereby Greece can bundle all of its June IMF payments into one payment) will afford the Greeks a few days of breathing room while Tsipras tries to close a deal.
Through it all, the troika is still holding all of the cards — or all of the cash. Unless creditors abruptly decide to relinquish calls for pension reform, Tsipras will eventually be forced to accept an unpalatable deal. Even if the ECB were to decide to remain completely neutral by routinely raising ELA and keeping haircuts on pledged assets unchanged, Greek banks will eventually run out of collateral. With deposit flight running above €100 million a day, the coffers would empty in a matter of weeks (if not days). At that point, it’s either introduce a parallel currency or revert to a barter economy.
Given this, the base case scenario still seems to be concessions by Tsipras on pensions and VAT, concessions which will not go over well with Syriza hardliners who essentially put euro membership to a vote late last month. Should Tsipras be forced to accept a deal on creditors’ terms, he will have to pitch the unpopular agreement to an unwieldy parliament — political turmoil will ensue.
Deutsche Bank has more on the possible outcomes:
What are the components of an "agreement"? The first component is Greek government sign-off, with the Prime Minister ultimately responsible. Our continued (marginal) baseline remains that such an agreement will be achieved, but the exact timing depends on the amount of pressure placed tonight as well as ECB willingness to tolerate ongoing increases to ELA funding. [This week] a small 500mio EUR increase to the ELA cap was granted, with accelerating deposit outflows in recent days likely further reducing the liquidity buffer available to Greek banks.
The second component to an agreement requires domestic political approval, with passage through the current ruling parliamentary majority being a pre- requisite for fund disbursement. It is only once legislation has passed through the Greek parliament that funding will be released. If the Greek government signs a deal, the three possible political processes would appear possible, in order of likelihood:
Passage through parliament, with potential opposition support and change in government coalition. This political avenue now seems the most likely as it is the quickest. Parliamentary ratification of an agreement could take place within a few days, with the main source of uncertainty being whether the current ruling coalition remains intact. Out of a 12 MP ruling majority, reports suggest a range of 10-40 MPs expressing strong dissatisfaction with the current state of play. Minister Nikos Pappas, one of the PM's closest associates, last week explicitly stated that the government would impose a three-line whip on any parliamentary vote, and the Prime Minister would likely attempt to ensure that any agreement is pre-approved by the party's central committee ahead of a parliamentary vote. With the track record of the current parliamentary majority exceptionally short however, it remains very difficult to assess the odds of parliamentary success. The need for opposition support - possibly in exchange for a change in the government coalition - would seem a likely outcome.
Referendum. A successful referendum would provide the Prime Minister with stronger political backing to pass an agreement through parliament, increasing the odds of ruling party support. However, this political avenue would require at least two weeks as well as requiring the prime minister's implicit backing. Absent such “reluctant support”, it is unclear if the referendum would be a success. It is also unclear whether a referendum could materialize before the end of June, when all IMF payments would be due, and as a result whether European creditors (and the ECB) would be willing to extend the existing program (even without disbursements) under such uncertainty.
Early election. A number of senior SYRIZA party officials have over the last few days suggested that an agreement may trigger an early general election. This is likely a means of pre-emptively exerting pressure on ruling party MPs, who in the event of withdrawing support from the government would be unlikely to be included in the party's new electoral list. An early election would be possible, but the least likely: the PM will likely be able to pass an agreement through parliament with opposition support, in turn generating strong incentives for a shift to a more moderate coalition within the existing parliament rather than a new electoral campaign following a painful compromise with European creditors. This notwithstanding, financial stability under an early election could only be ensured if some disbursements have materialized ahead of time accompanied by ongoing ECB financing of Greek banks. This itself will likely be conditional on passage of an agreement through parliament before a general election is called.
Note the last bolded passage above: "...the PM will likely be able to pass an agreement through parliament with opposition support, in turn generating strong incentives for a shift to a more moderate coalition within existing parliament rather than a new electoral campaign following a painful compromise with European creditors." That translates to this: Tsipras accepts creditors' demands and enough Syriza 'radicals' relent for the PM to pass the deal through parliament effectively transforming the party into a more moderate political position.
Again, that outcome remains the end goal for the troika. Creditors will force Tsipras to concede on most (if not all) of Syriza's mandate and the PM will then exert similar pressure on party hardliners until the deal is sealed and Syriza is effectively no longer Syriza.
After that, the only question will be how the Greek populace responds.
»
- 11572 reads
- Printer-friendly version
- Send to friend
- advertisements -
primary budget surplus - - the budget balance excluding interest payments
Sounds like a tribal motto to me.
THat's what I keyed on as well. Not a bad position to be in if you have NO interest payments, I think.
NoDebt, nearly none until 2022. I think both "nearly" and 2022 are relevant. cue in the IMF "projections", for all that they are worth, or their emphasis on what is sustainable or not
"11:00 PM deal" INCOMING!!!
in a way, it is. the primal scream of "how much"?
the problem with the discussion about balanced budgets is that budgets are about money in and money out. math, in short
note the lack of those numbers in the wider public discussion of what those parts are battling about
meanwhile, justice and politics speak a different language, that of words and pictures and real suffering, but also of entrenched political interests, like "the pensioners" or "the state employees" or "the armed forces" and so on
More money out and you are bankrupt. Gradually stealing through zirp nirp
and inflation and you end up bankrupt.
Mundus vult decipi, ergo decipiatur.
Sounds like a tribal motto to me...
Came across a pretty interesting quote while viewing the documentary "House of Rothschild" recently. It's likely been used before and I've just missed it but for being written in 1830 by poet Heinrich Heine so near the French Revolution, Waterloo and all, it remains prescient.
"Religion is no longer able to guarantee the governments that the people will remain peaceful. The Rothchild system of loans can perform the task much better...It possesses the moral force or power which religion has lost. It can act as a surrogate for religion.
Indeed it is a new religion and when the old religion finally goes under, it will provide substitutes for its practical blessings. Strangely enough it is once again the Jews who invented this new religion." - The Baths of Lucca, 1830
Personally, I prefer the "Old Time Religion".
jmo.
It's all Bullshit!!!
You mean living in a world where stealing a candy bar can lead to prosecution and jail time while bankers get immunity for securities fraud and market manipulation- to name a few. Or politicians who should be in jail running for the executive office? Or trade deals that have to be kept secret? Or repayment deals that count on new loans to pay off?
Shit, I think you are right!
And if you like your Bullshit, you can keep your Bullshit, Mr. Winkle.
I am fed up with all the speculation at this point because after an outcome all this speculation will turn out to have been a waste of time. So I'll wait at the sideline and see what the outcome will be.
Up your bonny ass DISSELBLOM
This is what happens when the really smart people are in charge! sarc
The outcome is very simple... The graft is skimmed and the serfs are screwed, same as it always is.
Sadly the serfs keep right on voting for the butt poundings. Same here in the good 'ol USSA!
the more I read ZH the less I think that "Same here in..." is really a valid argument. Similarities are not the same as "same as..."
in Leo Tolstoy's book "Anna Karenina" there is this imho apt quote: “All happy families are alike; each unhappy family is unhappy in its own way.”
Gordo you are cheap sophist.
;-) now, where did you get that from?
I resent that "cheap" as much as the age-old persecution of Sophistry. Technically and morally, Socrates was a Sophist. If it was ok for him, it's ok for me
give me anytime a damn good unanswered or not answerable question instead of some supposed Eternal Truth based on Platonic Ideals
Well, they have to do "something!"
What exactly is the argument for the greek government to back down? I believe their resolve is not appreciated, after all they do want to govern greece for the next 20 years, not likely to commit political suicide and succumb to the dictates of the institutions.
ANestIOS
Politicians selling out the voters is commonplace. The expectation that SYRIZA will sell out to the TROIKA has increased because of the lengthy counter-productive "negotiations".
Why counter-productive? Because, besides losing credibility and popular enthusiasm, the IMF payments have continued to be made until all Greek cash reserves have been exhausted. Painful as default may have been earlier, the conditions to do it now have been made even worse.
The political (NATO-EU bankster backed) opposition has been given time to strengthen and been given added weight to argue against incurring any painful consequences of default.
What is the argument (other than hope and faith) that SYRIZA will NOT back down?
Syriza will stand up and honor their promises just like the Republicans did. And the Greeks will not hold them responsible, just like the Republican voters.
Institutions are political suicide.
sure! it is in the best interests of Germany to see the Greek left platform doing well...hah
If you are into drones check out this site : www.pickyourdrone.com
He'll cave in 5...4..3..2...
All your politicians are ours- the money changers.
You know when they're dealing with "red lines", its very very serious. A "line in the sand" can be easily moved. A "red line" can't be. Hold tight, things could get pretty crazy now.
I guess you forgot, politicians need to be firm but flexible.
He already raided the pension funds. That money was handed over to the bankers (jmafia) through the EU. It' gone. Now he is just making noise and theater to pretend he fought for the common Greek and to fool them.
They have been working for the benefit of the bankers from day one. Golden Dawn was the only hope the Greeks had and that is why official systems, LE and the justice system was used to demonize and prosecuted GD.
It will be interesting what collateral he quietly signs over to the jmafia. I think the next phase is keeps the Greeks on the edge of personal survival mode so they cannot or will not resist the stealing of all the hard assets and land of Greece.
Whatever, announce the next bailout and it's yesterday's news.
It's groundhog day over and over.
Beating this to death.
Maybe the Onion can report on Greece going forward.
At what price freedom and democracy ?
Does Greece have the guts to walk away from the past and build its future on a new premise?
Can Syriza rise to the challenge if they opt out?
This government has a pretty good idea that Greeks HATE paying taxes to then earn social security and pensions in return like everywhere else. Work, pay your dues and live off disposal income. Even if the money is Drachma; until you can compete with the others in a common currency. Greece is not made out to be self sufficient in a Euro structure. No way.
If the Greeks won't accept fiscal discipline and pay their dues, no amount of pump and dump and hair cuts will solve the problem.
In the final analysis a country has to grow up and be self sufficient or it reverts into serfdom for other masters (like Mutti).
True for any nation.
But that is now dépassé; as Euro group needs Greece to stay and not pull the plug by Grexit. That would start a shock wave accross Club Med!
Club Med would become Club Mad Max!
The other risk to watch out for is the total failure of the Greek state, and that migrating to other borderline states with all the issues and risks that entails for Europe.
It is all very well for them to have their way with Greece, but what follows within Greek society should not been seen as being without greater risk. When people have nothing left to lose.
Does anyone really believe that the surrendering of our Greek goverment means anything in the real world?
IMF and Merkel managed to kill the Greek economy in 5 years of memorandums. Now they hope that making new taxes for the poor and unemployed Greeks will give them their billions back!
Well this is a reality check: no money left to the masses for you IMF and Merkel...Get ready to inform your people with the ugly news: you have lost almost a trillion euros in the Greek black hole! And good luck with your masses when they get the "dear John" letter!
When does Tsipras start calling the EU lot what they really are:: a bunch of fascist jerk-offs, Mutti included.
The Syriza party radicals are broke immigrants and aliens, literally cannon fodder used only to push debt and immigration ,Tsapiras is a stooge, a prop, a tool for acquiring and dumping debt jnto others, he'll do whatever is in the script like Obama.
We are reading a lot of analysis from people that look at the matter from the EU viewpoint. Unfortunately we know next to nothing about the real views and intentions of the Greek leaders.
You just can't trust any of these Social Dem/Labour Lefties. Foreign as well as domestic. In the end they always find an excuse to surrender to the elites at the expense of their party supporters