"Completely Absurd" To Think Greece Won't Default In May: Official

Facing a pensioner rebellion and a looming €780 million payment due to the IMF on May 12, Greece’s back is now truly against the wall. Last Tuesday, Athens appears to have run out of cash, triggering an 8 hour delay in pension payments which left some pensioners walking away from ATMs empty-handed. This didn’t sit well with the country’s retirees who reportedly disrupted a state pension fund board meeting and demanded that cash reserves not be transferred to the central government as mandated by a decree that came down last month. 

Now, with a reshuffled negotiating team (characterized by less Varoufakis and more negotiating), PM Tsipras is racing to strike a deal on reforms that would allow the country’s creditors to disburse the bailout money Athens needs to pay… well, to pay its creditors (we’ll ignore the circular reasoning there for now). 

More from Bloomberg:

While talks have picked up pace in recent days, the two sides are still trying to bridge differences on stalled reforms. It isn’t yet clear that there will be enough progress to clinch a deal in time for the planned May 11 meeting of euro-area finance ministers, some officials warned.


“They’re working hard now and that’s what we’ve gained,” Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem told reporters in the Hague. “But in the end we only look at the results and we’re not that far yet.”


Greek Prime Minister Alexis Tsipras told his cabinet on Thursday he’s confident of closing a deal, even as his government sent conflicting signals on its willingness to agree on reforms required under the 240 billion-euro ($268 billion) bailout. Faced with debt payments totaling about 1 billion euros to the International Monetary Fund on May 6 and May 12, Greece hopes there will be enough progress in the talks by next week to allow the European Central Bank to restore liquidity access for the country’s cash-strapped banks…


Dijsselbloem said it was too early to say whether talks with Greece had reached a turning point. While there has been progress in terms of the process after Tsipras reshuffled the negotiating team, pushing aside Finance Minister Yanis Varoufakis, there is still a long way to go on the substance, a person familiar with the matter said, asking not to be named because the talks are private.


The official said that the Greek government’s economic assumptions are very optimistic, making it difficult to agree on the extent of fiscal adjustment measures the country must adopt to meet goals under its bailout.

Despite attempts by both sides to project an air of optimism, the stark reality seems to be that Greece will attempt, to the bitter end, to stick with its “red line” campaign promises as practicality, reality, and the economic suffering of the Greek populace seem to have taken a permanent back seat to Syriza’s desire to hold on to whatever political legitimacy the party has left. Meanwhile, some officials have now suggested that even if a deal were struck this weekend, there simply is no chance that Athens will make the payment due to the IMF on May 12.

Via Bloomberg:

Even if an agreement between Greece and international creditors reached, it would take weeks for the next aid tranche to be paid, Handelsblatt reports, citing people close to the government.


Greek government hoped to pay ~EU750m to IMF on May 12 with help of international creditors: Handelsblatt


It’s “completely absurd” to think money will be transferred by then, as “prior actions” by Greece would be required, approved by Greek parliament, even in the event of a deal: Handelsblatt

And here is Athens which appears to be re-adopting the now infamous “tax driver” approach:


So while things do not look particularly promising in terms of avoiding a Greek default in just 10 days' time, Athens can always (re)play the war reparations card. 

From Reuters:

German President Joachim Gauck expressed support on Friday for Athens' demands for reparations for the Nazi occupation of Greece in World War Two, even though the government in Berlin has repeatedly rejected the claims.


Gauck, who has little real power in Germany but a penchant for defying convention, said in an interview to be published in Saturday's Sueddeutsche Zeitung newspaper that Germanyshould consider its historical responsibility to Greece.


"We are not only people who are living in this day and age but we're also the descendants of those who left behind a trail of destruction in Europe during World War Two -- in Greece, among other places, where we shamefully knew little about it for so long," Gauck said.


"It's the right thing to do for a history-conscious country like ours to consider what possibilities there might be for reparations."


Greece's demand for 278.7 billion euros ($312 billion) in reparations for the brutal Nazi occupation have mostly fallen on deaf ears, but some legal experts say it may have a case.


Many in Greece blame Germany, their biggest creditor, for the tough austerity measures and record unemployment that have followed from two international bailouts totaling 240 billion euros.

And although German economy minister and vice-chancellor Sigmar Gabriel recently called Greece's reparations claims "stupid", Merkel is striking a concilliatory tone ahead of WWII's anniversary:

Germans “have a special responsibility to deal in an aware, sensitive and knowledgeable way with what we perpetrated under Nazism."


"[We can't draw a line in the past] we see that in the debate in Greece and in other European countries, too."


“I fully understand [the] long-lasting wounds and concerns that there are in other countries.”

As we noted last month, Greece is expected to bring up the issue again and again with whatever tools it has in its hands. Until it decides to solve the issue in the courts.

For the Germans, it appears this topic is not going away anytime soon.