Greece Invokes Nuclear Option: Tsipras Calls For Referendum

Tyler Durden's picture

Update: Greek PM Alexis Tsipras has announced a referendum in a televised speech to the nation after another day of fractious negotiations with creditors closed without a deal.

The dramatic move comes after Athens rejected a proposal from the troika aimed at delivering some €16 billion in aid to Greece as part of an extension of the country's second bailout program.

  • GREECE'S TSIPRAS SAYS CREDITORS POSED ULTIMATUM TO GOVT
  • GREECE'S TSIPRAS SAYS CREDITORS PROPOSALS ARE AGAINST EU RULES
  • TSIPRAS SAYS CREDITORS AIM TO HUMILIATE GREEK PEOPLE
  • TSIPRAS SAYS WILL CALL REFERENDUM ON GREEK DEAL WITH CREDITORS
  • TSIPRAS GREEK REFERENDUM WILL BE HELD ON JULY 5
  • TSIPRAS SAYS HE NOTIFIED MERKEL, DRAGHI ON REFERENDUM PLAN
  • TSIPRAS SAYS GREECE IS, AND WILL STAY PART OF EUROPE
  • TSIPRAS SAYS GREECE NEEDS TO SEND DEMOCRATIC RESPONSE TO EU

Protothema now says the Greek parliament will meet on Saturday and a referendum will be called as early as next week. Whether this is simply a last minute attempt to put pressure on EU finance ministers ahead of Saturday's Eurogroup meeting remains to be seen, but one thing is for sure: Tsipras is playing a dangerous game with the ECB ahead of a difficult week that could very well see the imposition of capital controls.

More from Kathimerini:

The government is considering a referendum on the substance of the agreement, according to recent reports, during the enlarged meeting taking place from Friday night at the Maximos Mansion. The referendum is expected to be held next Sunday, while the prime minister has already informed the political leaders. The prime minister after returning from Brussels convened the extraordinary Governing Council at the Maximos Mansion, which after 23:00 turned into cabinet by attendance of ministers and party executives to discuss the latest developments and next steps in view of tomorrow's Eurogroup.

Earlier:

Protothema is reporting that Tsipras has confided in a fellow EU official that if the country's creditors insist on sticking to pension and VAT red lines and if Friday's bailout extension proposal (which the Greek government apparently views as a patronizing stopgap) is the troika's final offer, he is prepared to call for snap elections.

Via Protothema (Google translated):

The dramatic developments of the last few hours, following the government's move to reject the proposal of the creditors may conceal preparation for use of the popular verdict, a decision which is expected to be finalized in the next few hours if the lenders do not move from its rigid positions. According secure information protothema.gr, a few hours ago he Prime Minister Alexis Tsipras European leader confided in Eurozone member country adjacent friendly in Greece that the data are up to this moment is ready even to call early elections. 

 

This revelation of thought by the Greek prime minister to the foreign leader can be interpreted in two ways: Either Mr. Tsipras is ready "plan B" if tomorrow the negotiation fails or leaked deliberately in order to exert indirect pressure on lenders to mitigate their requirements. Upon completion of the meeting Mr. Tsipras with Angela Merkel and Francois Hollande, the Greek side revealed that the Prime Minister pointed out to the leaders of Germany and France that does not understand why the institutions insist on so hard measures. The prime minister insisted his decision to reject the proposal of the creditors for a five-month extension of the existing agreement with a funding of 15.5 billion euros. "The proposal does not cover us, because the financial part of barely meets the needs for payment of installments to the lenders, not help anywhere else the economy," emphasized a close associate of Alexis Tsipras and adds: "We will not accept the proposal, as we said, we were waiting to bring us another proposal tomorrow."

Greece has rejected creditors' bailout extension proposal.

  • GREECE SAID TO REJECT EU15.5B BAILOUT EXTENSION PROPOSAL: ANA

*  *  *

On Friday, the German press reported (and Bloomberg later confirmed) that Greece’s creditors had presented PM Alexis Tsipras with a document (essentially an outlining the following available funds that could theoretically be part of either an extension of the country’s second bailout or a third program (with the latter having been previously ruled out by the IMF and German lawmakers). The details are as follows:

  • EU creditor proposal foresees EU8.7b in EFSF funds: official
  • Creditor proposal foresees EU3.3b in SMP profits: EU official 
  • Creditor proposal foresees EU3.5b in IMF funds: EU official

As noted, if Greece receives €3.3 billion from SMP profits it will mean that the ECB has forfeited the money it made on the Greek bonds it purchased in the past, effectively allowing Athens to repay the central bank with its own money. Here's DB with some color:

There may be a more rapid disbursement option. EUR1.9bn of the EUR7.2bn stalled tranche is SMP profits. Releasing these funds might only involve a decision by finance ministers without necessarily consulting parliaments. Disbursing EFSF funds, on the other hand, requires the national approval process (e.g., the joint decision by the German Finance Minister and the Budget Committee, if not a full plenary vote). In other words, SMP profits could be disbursed at short notice. These would be sufficient to pay the EUR1.6bn owed to the IMF on Tuesday.

As for the EFSF funds, it's long been suggested that bank recap funds could be chanelled to Athens under the 'right' circumstances and apparently imminent default is as good an excuse as any. Citi has more on the EFSF funds:

The interim proposal would likely allow Greece to use part of the €10.9bn from the original Hellenic Financial Stability Fund (HFSF) designated for Greek bank recapitalization, and later transferred back to the EFSF/ESM. Various media outlets have reported on the possibility that around €9bn could be used for current expenditure, in line with our estimates of the financing needs of the Greek sovereign for 3Q. Although a unanimous agreement will be required at the ESM board level to redirect the resources away from its banking recapitalization objective, we believe that a deal is likely to be found. The release of such funds would allow an extension of the current programme for several months, while giving more time for creditors and the Greek authorities to complete the negotiations for a third aid programme. It could also convince the ECB to increase the T-bill ceiling and the SSM to raise the ceiling on the exposure of Greek banks’ to their sovereign. All this however remains conditional on the approval of the ‘interim’ package by the Greek Parliament as well as by various national parliaments (in Germany, the Netherlands and Finland among others).

German Chancellor Angela Merkel implored Tsipras to accept what she calls a “generous” offer and has been adamant that a deal must be struck by the time the market opens on Monday which effectively means that EU finance ministers will need to strike an agreement at tomorrow’s Eurogroup meeting which starts at 2 pm local time. “I spoke today about a very generous offer because we simply have moved a step toward Greece, also with respect to the February agreement,” Merkel said.

In the wake of this morning’s news, the rhetoric from Tsipras has only hardened with the Greek PM pledging to uphold the democratic values upon which the euro was founded and to not accept “blackmail” (which of course is rather ironic, considering Merkel said precisely the same thing with regard to the Greek on Thursday):

Document of proposals presented to the Greek side by the institutions is “worse than a memorandum,” ANA reports, citing Greek govt officials in Brussels.

 

Greek Prime Minister Alexis Tsipras says he will defend the European Union’s founding principles of “democracy, solidarity, equality, mutual respect” as he seeks an agreement with international creditors to unlock aid for the country.

 

“These principles were not based on blackmails and ultimatum, and especially in these crucial times no one has the right to put in danger these principles,” Tsipras tells reporters in Brussels after an EU summit

 

“The Greek government will continue decisively to give the fight in favor of these principles, to continue to give the fight on behalf of the European people and of course on behalf of the Greek people,” he says. 

 


For reference, here's a breakdown of what Greece's fiscal situation (i.e. budget deficit) looks like going forward:

*  *  *

Or, summarized:

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
NoVa's picture

Different day, same TV show and channel.  

fromthinair's picture

depends .. sadly true we are here for entertainment ... but this is how waterboarding is done.... that is the ugly truth. Who is waterboarding who.. can't say yet.

http://just-a-thought-from-thinair.blogspot.com/

 

Creepy A. Cracker's picture

Then stop spending so much money and pay your bills, a$$hole.  You aren't so special that everyone else in the world should pay for your excesses.

Bumpo's picture

I like the throwing of Merkels and the EU's own words back at them. Hoping someone gets pissed and throws a hissy fit. May the Saga pick up steam ... Perhaps a Djisselbomb will go off or Scheuballs head will explode!

y3maxx's picture

Time for a greek politician staple gun or jump off tall building suicide

Captain Debtcrash's picture

So the market was up based on the hope provided by the bailout proposal but will it ignore the proposal being rejected like last time?

PrayingMantis's picture

 

 

... Troika: "Bend over"

... Tsipras: "No!"

Kina's picture

 Troika: "Bend over"

... Tsipras: "No!...you bend over"

Troika: "No you bend over"

 

Russia-China: "you both bend over"

 

Stackers's picture

It's like watching a group of people play Russian Roulette with every chamber of the gun loaded

LawsofPhysics's picture

yes, now wake us when someone actually pulls the trigger.

Manthong's picture

Achtung!

Mein Deutsch-Brüders

Ist das not nicht dein derivatives crash.

Ues das is dien derivatives crash

or not,..

LawsofPhysics's picture

Please, the same fuckers that created the derivatives "market" are the same fuckers that will decided if there is a "default".  Guess what?  They are not going to kill themselves...

MillionDollarBonus_'s picture

Greece will eventually come around. It is simply not feasible for them to leave the EU. The EU nation states have grown into a single highly complex symbiosis, and as Barosso and President Jean-Claude-Junker have wisely noted, what Europe desperately needs is more integration, not less. It is only through cooperation and further centralization of monetary and fiscal policy that Europe will recover from this temporary setback.

dontgoforit's picture

A turd wrapped in gift paper is still a turd. 

 

Socialism is a disease that kills the healthy and the unhealthy with equal vigor.

eclectic syncretist's picture

Capitulation of Greece to the BRICS printers could be a historical milestone in the popular delusions of mankind.

knukles's picture

Hold the Boat!
It's not Saturday, yet.  Whadda we got, a new Red Line in the Sand?

                I dare ya'!  I double dare ya'!

Stanley Kubrick's picture

Realize, these assholes have more than one definition of the word 'default':

Greece won't Default on Monday

The triple doublespeak is beyond belief.

 

semperfi's picture

the default will only come about once Greece descends into chaos via civil war/revolution - thats the only way this shitshow will end - guaranteed

Arnold's picture

I just found out that Tsipras is not relates to Pete Sampras.

Might as well play the baseline, he has held his own this far into the tournament.

Supernova Born's picture

Greece must let the sun set on the West and look for a sunrise in the East.

invisible touch's picture
  • TSIPRAS GREEK REFERENDUM WILL BE HELD ON JULY 5
  • TSIPRAS SAYS HE NOTIFIED MERKEL, DRAGHI ON REFERENDUM PLAN
  • TSIPRAS SAYS GREECE IS, AND WILL STAY PART OF EUROPE

all is said, you ask people but you will stay, whatever the cost.

fuck you greek fucks, you like frenchs goats in 2005 voting no but sarkozy counter mesured to a yes...

WHOLE europe is a fucking scam, plan accordingly.

conscious being's picture

He did not say Greece will stay in the Euro monetary union. To me he's just stating, with that last line, the cultural, geographic fact that Greece is part of Europe.

THX 1178's picture

This is the blackest fuckin swan I swear.

zhandax's picture

Goldman said the EU couldn't debauch their currency fast enough with the Greeks in.  Isn't this just everyone following the script?

invisible touch's picture

i announce the result of the vote to be a YES, we accept.

 

you will see....

conscious being's picture

He did not say Greece will stay in the Euro monetary union. To me he's just stating, with that last line, the cultural, geographic fact that Greece is part of Europe.

invisible touch's picture

of course saying we stay in europe is just like saying i will move my arm from my elbow to my ass, you can tell what you want but cannot disconnect your arm and plug it elsewere on your body... geography

 

they will vote no but a yes will be media displayed, just because grexit = neo drakma = hyperinflation +h24 = more monetary problem = real, i mean serious reel problems they did not faced YET.

Anusocracy's picture

Give them the rope.

One way or another they will hang themselves.

philipat's picture

And of course, as with all referenda, the outcome will depend on how they word the question. If it is made clear that further austerity is inevitable when staying in the Eurozone, the Greek people will probably vote for out. If the question is simply whether they want to remain in the Eurozone, the answer would be to vote for in.

petkovplamen's picture

you mean Corporisitsm. Get your definitions straight.

Monetas's picture

The State is the biggest corporation .... the voters have common stock .... the government employees have preferred stock !

Joe Tierney's picture

The EU is a turd

wrapped in a rubber

wrapped in a bearded transsexual wedding invitation

wrapped in a Utopian wet dream

X_Weatherman's picture

The U.S. / German brand of corporate-fascism murders millions for exorbitant profits.

Luc X. Ifer's picture

dude u have no fucking clue what socialism is. all what millimetric biusonian brain was injected with was scaremongering propaganda about a system which had nothing to do

with the real socialism, ask any healthy, educated mind who lived in that system if that was real socialism or fascist statism. Now what Bisonia has is corporatist fascism.

go back to the reading desk and educate yourself before opening your cakehole.  

datura's picture

but it is not feasible for them to pay that stupid debt. There are too much hungry and furious people already. If more austerity is forced, this will trigger revolts everywhere and very probably Greeks will turn to the Golden Dawn. There would be no one else left. You can only force people so far, but when they have no more to loose, they will bite back. As I already said somewhere, if people in ancient Egypt got too hungry, they would even overthrow the pharaoh (the God on earth for them otherwise). When their desperation reached such levels that death was preferable, no one was able to stop them. The banksters keep pushing, but history tells us that you can brainwash people only as long as you give them at least something in return (as the proverbs goes: the emperor must provide bread and games). When there is no more bread, the emperor is in a very big trouble. 

Lore's picture

I think Tsipras is about to pull a fast one on the Troika. Consider his flagrant butt-kissing: "Greek Prime Minister Alexis Tsipras says he will defend the European Union’s founding principles of “democracy, solidarity, equality, mutual respect..." <-- Nobody in their right mind makes this kind of statement with sincerity.  And then he threatens to pull a snap election?  What kind of leader folds when he knows he's playing a rigged hand?  BOTTOM LINE: TSIPRAS IS "KEEPING THEM TALKING."  HE'S BUYING TIME FOR A SURPRISE. 

ThirdWorldDude's picture

He's not a butt-kisser, but only being cynical. I believe he's really pissed off and is gonna proceed with a referendum.

Consider this: when Varoufakis told NO to those same people in that same room they threw him out. Now they want to throw Tsipras out for telling them 'hell no' and the only one eligible to decide is his boss - the people of Greece.

Re-read his line again.

Crash N. Burn's picture

"Consider this: when Varoufakis told NO to those same people in that same room they threw him out. Now they want to throw Tsipras out for telling them 'hell no'"

 

The Greek PM seems to understand the European banks are screwed if Greece won't be a good little debt slave.

Who Loaned Greece the Money? Greece owes a lot of money to a lot of people. Check out who loaned the money.

Information Date: 2012 February. Source: EBA (Eurpoean Banking Authority)

Mentaliusanything's picture

They like Soccer but can't afford a Ball... so what do they kick???

Marco's picture

Their external debt load is almost non existent due to all the refinancing deals ... they are mostly going bankrupt because they haven't balanced their budget.

conscious being's picture

Your post is not credible. It says in the article that most of the "generous" offer would go to pay the banks.

Marco's picture

That's just accounting. They have to pay the interest to get bailout funds, on the net they are only getting money.

ebworthen's picture

Some top notch sarcasm there MDB.

Implied Violins's picture

Heck yeah. Problem tho: I never know whether to upvote or downvote him. What has more meaning for him? If I upvote, does he just assume I'm a stupid assclown who actually believes what he's saying? If I downvote, does that just indicate to him that I don't understand sarcasm? SO I usually just leave him alone.

MarxFelix's picture

MDB wrote:

Greece will eventually come around. It is simply not feasible for them to leave the EU. The EU nation states have grown into a single highly complex symbiosis, and as Barosso and President Jean-Claude-Junker have wisely noted, what Europe desperately needs is more integration, not less. It is only through cooperation and further centralization of monetary and fiscal policy that Europe will recover from this temporary setback.

There's only a single small/big problem my friend... No one want it!! French don't like Germans, Germans don't like French, and both don't like Italians etc etc. All the european system was created by a really "small circle" of people.

bid the soldiers shoot's picture

4 U

"a really "small circle" of people."


a really "small circle" of jerks.  fixed it 4 U.

 

OldPhart's picture

You mean the EU is just another circle jerk?

Macon Richardson's picture

Thanks for reprinting the official EU Brussels propaganda hand-out. It reassures us all that God's in his heaven and all's right with the world.