As Greek PM Alexis Tsipras implores EU officials to help him give Greece a happy ending [10], and as Germany goes into Monday’s eleventh hour bailout discussions with characteristically “low expectations,” Athens’ freewheeling FinMin has blessed us with several amusingly contradictory soundbites over the last 24 hours. To wit:
- VAROUFAKIS: ‘PLENTY OF COMMON GROUND’ IN TALKS ON GREEK PROGRAM
- VAROUFAKIS SEES ‘SEEDS OF FRAGMENTATION’ IN THE EU
- VAROUFAKIS: GREECE PREPARED TO 'GO TO THE WIRE' IN AID TALKS
- VAROUFAKIS SAYS WE WILL CERTAINLY HAVE AGREEMENT IN NEXT 2 WKS
Fortunately for Greek pensioners (whose payments were recently delayed when Athens briefly ran out of money experienced a “technical glitch”) and for Greeks in general (who, while averse to the adoption of further austerity measures, still support euro membership presumably because they now understand that an exit will lead, in short order, to a deep depression), Varoufakis was recently removed from Tsipras’ bailout team starting lineup and relegated to the role of smug sixth man after the embattled FinMin did more lecturing than negotiating in Riga last month, sending his EU counterparts into a rage.
However, if the last three months have proven anything, it’s that since Syriza’s ascendancy, negotiations with Athens generally adhere to the following variation of Murphy’s Law: “If Varoufakis can mess it up, Varoufakis will mess it up.” As such, we weren’t surprised to learn that while the Greek PM has been hard at work in a desperate attempt to appease creditors and avert a catastrophic default, Varoufakis has been busy distributing a 36-page “blueprint” for Greece’s economic future which one EU official described as having “no connection” to the negotiations and reads like a “program for a country that does not have any financing problems, but just wants to catch up and be a nice tourist destination.”
Here’s WSJ [11] with more:
Documents containing overhaul plans and growth estimates distributed by Greek Finance Minister Yanis Varoufakis to some of his eurozone counterparts have baffled officials involved in the talks between Greece and its international creditors.
Officials say that the files differ greatly from what has been discussed in technical talks in Brussels in recent days and underline how Mr. Varoufakis continues to complicate progress toward a financing deal.
The 36-page document, entitled “Greece’s recovery: A blueprint” and seen by The Wall Street Journal, was presented by Mr. Varoufakis to his counterparts in Paris and Rome, as well as senior officials in Brussels while touring European capitals over the last week, according to four European officials…
The contents of the paper focus on the future of the Greek economy, and how it can return to growth. “Perhaps it is time to visualize a recovering Greece before we unlock the present impasse,” the document says, before going into the various areas where the country plans to reform...
“There is hardly any connection between his blueprint and the ongoing ‘negotiations’,” an EU official said. “It seems like a fine program for a country that does not have any financing problems, but just wants to catch up and be a nice tourist destination,” he added...
An area where officials identify as significantly different to what is currently discussed between experts from both sides is the creation of a “bad bank”—an entity that would house and wind down Greek lenders’ bad loans. “Conveniently, the financing of the bad bank is not treated—he said he would send us the check” the official said.
Mr. Varoufakis’s document also predicts Greece’s economy will grow just 0.1% this year, below the 0.5% forecast this week by the European Commission. In the talks in Brussels, Greek officials have been pushing for a higher growth estimate than the one published by the commission. For 2016, Mr. Varoufakis’ files expect 2% growth, also below the 2.9% forecast by the commission.
“The problem is that Varoufakis doesn’t seem totally in line with [Greek Prime Minister Alexis] Tsipras,” another official said, adding that it isn’t clear to what extent the files represent the government’s position.
Varoufakis it seems, has not entirely resigned himself to his new role as second fiddle in talks with EU creditors. One is certainly left to wonder just how long Tspiras will allow the FinMin to persist in distracting negotiators ahead of a payment schedule that is set to be more unforgiving by the week starting next Tuesday.
We suspect it's likely just a matter of time before the FinMin finds himself with quite a bit of free time to spend philosophizing at his island villa.
For reference, here is the most recent data on Greece's debt:
- EU130.9b of EFSF loans
- EU52.9b of loans from euro-area member states
- EU39.4b of privately-held bonds
- EU21.2b of IMF loans
- EU19.8b of bonds held by ECB under SMP program
- EU14.9b of treasury bills
- EU9.8b of short-term repo lending
- EU7.3b of bonds held in euro area central bank investment portfolios, known as ANFAs
- EU7.1b special multilateral loans from abroad (EIB)
- EU5b of other lending from abroad
- EU4.3b of Bank of Greece loans
- EU0.1b of other domestic lending
