As Athens prepares to try and convince eurozone creditors that its latest set of proposed reforms represents a credible attempt to address Greece’s fiscal crisis, and as Greek depositors face the very real possibility that they will soon be Cyprus’d, a leverage-less Alexis Tsipras faces a rather unpalatable choice: bow to the Troika which “wants [8] real reforms… meaning that Greece finally has to implement some/any of the long ago promised and never delivered redundancies in the government sector,” or to quote Credit Suisse, be “digitally bombed back to barter status.” Unfortunately for the Greek populace, the latter seems to be far more likely than the former. Here’s WSJ [9]:
Greek proposals for a revised bailout program don’t have enough detail to satisfy the government’s international creditors, eurozone officials said, making it more likely that Athens will need to go several more weeks without a new infusion of desperately-needed cash…
“The proposals were piecemeal, vague and the Greek colleagues could not explain technically what some of them actually implied,” a eurozone official said. “So, let’s hope that they present something more competent next week.”
Senior eurozone finance officials will hold a teleconference on Wednesday to discuss the situation, officials said. But they said it is highly unlikely eurozone ministers will meet before mid-April to release more money for Greece. That means Athens will have to scrape together cash to pay salaries and pensions at the end of the month and make a €460 million debt repayment to the IMF on April 9.
As a reminder, here are two charts which demonstrate the urgency of the situation:
[10]
[11]
Despite what is unquestionably a rather dire outlook, Athens does have one card it has yet to play, because as we noted last week, “once the first week of April comes and goes and Greece officially runs out of money, it will go to anyone who can provide it with the funds needed to avoid civil war, even if that means switching its allegiance from Europe to the Eurasian Economic Union, something Russia is eagerly looking forward to, and something we predicted would be the endgame months ago.” With the Tsipras/Putin meeting now just a little over a week away, you can bet that Moscow will not squander an opportunity to procure a bit of leverage over Europe in the face of an increasingly contentious situation in Eastern Ukraine. In fact, Moscow is calling Tsipras’ visit a “big event” and has indicated that any request for financial assistance would be “examined.” Here’s more via ekathimerini [12]:
“We are certain that the Greek prime minister’s working visit to Moscow will be a big event for our bilateral relations,” said Russian ambassador Andrey Maslov. “The possibility of further cooperation in trade, energy, technical military issues, education and culture will be examined.”
Maslov said that any request from Athens for a loan would have to be “examined very carefully” because of Greece’s euro membership. “If the Greek government submits a request for a loan, it will be examined – as Foreign Minister Sergey Lavrov said after meeting his counterpart Nikos Kotzias and as Russian Finance Minister Anton Siluanov has said,” the Russian ambassador told Kathimerini.
Maslov played down the possibility of Moscow lifting the embargo on food imports from Greece or other European Union countries as long as the EU keeps its sanctions on Russia in place. However, the ambassador praised Athens for helping prevent a rift in the EU’s relations with Russia.
“We are grateful for Greece’s efforts in helping ease the tension in relations between Russia and the EU, which is mainly due to the sanctions,” he said. “The stance of our Greek partners and other EU member-states during the council of foreign ministers in January and at the EU leaders’ summit in February prevented the hawks... from creating a permanent rift in Russia-EU relations.”
This may indeed represent an opportunity for Moscow to conduct a quasi-annexation-by-loan (as opposed to by force) and besides, any money funneled to Greece will ultimately end up back in Moscow anyway because any cash Athens manages to scrape together to pay the IMF is essentially diverted straight to Kiev which as we’ve said before [13], “is just as broke as Greece, and needs to pay Gazprom yesterday to keep gas deliveries coming, with Gazprom promptly remitting the funds into Putin's personal money vault.”
We’ll leave you with the following from ekathimerini [14]:
“Pressures on Greek bank deposits have continued in March, with sector officials estimating that households and enterprises have withdrawn a net 3 billion euros in the first weeks of this month.”
