The Greek "Choice": Hand Over Sovereignty Or Take Five Year Euro "Time Out"

Tyler Durden's picture

For those who missed today's festivities in Brussels, here is the 30,000 foot summary: Europe has given Greece a "choice": hand over sovereignty to Germany Europe or undergo a 5 year Grexit "time out", which is a polite euphemism for get the hell out.

As noted earlier, here are the 12 conditions laid out as a result of the latest Eurogroup meeting, which are far more draconian than anything presented to Greece yet and which effectively require that Greece cede sovereignty to Europe, this time even without the implementation of a technocratic government.

  1. Streamlining VAT
  2. Broadening the tax base
  3. Sustainability of pension system
  4. Adopt a code of civil procedure
  5. Safeguarding of legal independence for Greece ELSTAT - the statistics office
  6. Full implementation of autmatic spending cuts
  7. Meet bank recovery and resolution directive
  8. Privatize electricity transmission grid
  9. Take decisive action on non-performing loans
  10. Ensure independence of privatization body TAIPED
  11. De-Politicize the Greek administration
  12. Return of the Troika to Athens (the paper calls them the institutions... for now)

One alternative, generously presented to Greece, is for the country to put some €50 billion of assets - the best ones - in escrow to creditors. A more polite was of putting would be a Greek secured loan. This is how the Luxembourg FinMin Pierre Gramegna laid it out:

"A few new ideas were added to the table, especially one which is very important for some member states, which is that Greece would put a portion of its assets into a company that would be more independent from Greece."

"More independent" from Greece and "more dependent" to Berlin.

Greece would place about €50 billion of state assets into an independent company. Those assets could serve as collateral against aid loans, Gramegna says. "It would act as a kind of guarantee. There is great hesitation from the Greek side and now the heads of state and government have to choose."

"It would be a company structure based in Luxembourg, which would be managed from Greece with supervision by the European Commission and by the European Investment Bank. It would remain in Greek hands but it would create more assurances if it was known that a lot of assets were in this company."

"If one knows that the third bailout package would cost more than EU80B, one understands that countries are urging for some guarantees from Greece."

In other words, Greece is told to set aside a quarter of its GDP for Europe to do as it sees fit, and which can be "seized" if Greece is seen as veering away from its third bailout promises again.

And since Greece has no option but to promise everything and the moon, it will surely comply hoping that it is once again allowed to promptly forget all the promises as soon as it pockets some of that €86 billion in new bailout funds just to unlock the €120 billion in deposits held hostage in Greek banks by the ECB, even if the resulting debt will push Greek debt/GDP well above 200%.

Why?

Because the alternative is, and we quote...

"In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area, with possibly debt restructuring."

... from the Eurogroup document:

No wonder Tsipras looks like this at the moment:

Somehow we think that if the only "alternative" is ceding sovereignty to Merkel and the rest of the northern European state, the vast majority of the population - which now clearly understands there is little further upside from remaining in Europe - may just opt for the aptly named "time out" from the most destructive experiment in Greek history. And even beg to make it permanent.