In a speech to parliament on Friday, Greek PM Alexis Tsipras called a proposal drafted by the country’s creditors “an unpleasant surprise”.
Tsipras, who submitted his own proposal to Angela Merkel, Francois Hollande, Jean-Claude Junker, and Mario Draghi on Monday just ahead of an emergency meeting between the four in Berlin, says the counterproposal he received on Wednesday from the troika was “unreasonable” and can’t possibly be the basis for a deal. He went on to say that Greece will not be “blackmailed” and even went so far as to suggest that the institutions’ draft was a negotiating “trick” and may ultimately be withdrawn.
While it’s as yet unclear whether Tsipras’ bluster is genuine or simply reflects the fact that thanks to the so-called “Zambia” option — whereby Greece will now bundle its June IMF installments into one payment due at the end of the month — the PM can now feign belligerence for another few weeks before ultimately conceding amid an acute liquidity crisis and a default to creditors.
In the mean time, Tsipras must toe the line between adopting language that appeases the more radical members of Syriza, and testing the waters to discover what (if any) concessions would be acceptable to parliament.
As we’ve argued, the troika has every reason to stick to its guns. The risk of emboldening Syriza sympathizers in Spain and Portugal now far outweighs the projected fallout from a Grexit — or so the narrative goes.
Greece, on the other hand, will face devastating economic consequences, political instability, and social unrest in the event the country returns to the drachma, meaning Tsipras’ move to effectively call the troika’s bluff might have been more show than anything else. That is, the longer the PM can put on a brave face, the harder he can say he fought when, in the end, he is forced to go to parliament with an unpopular deal or face an economic depression the depths of which are as yet impossible to measure. Here's UBS with a bit of color on this:
Seen from a positive angle, the bundling buys the Syriza government some time and arguably facilitates the cash-flow management in the immediate weeks ahead. But the bundling also raises concerns. It is a reflection, in our view, that the gulf between the Greek government and its international partners is still wide. It might also suggest that Prime Minister Tsipras is under significant pressure from the left wing of his party not to make concessions to the Troika.
If, on the other hand, Tsipras is serious about sticking with the mandate that got Syriza elected (which is possible), he got a rude awakening on Saturday when, insulted by the PM’s fire and brimstone speech to parliament, EU Commission President Jean-Claude Junker refused a meeting, noting that if Tsipras is serious about going down with the ship, there’s nothing left to talk about. FT has more:
Alexis Tsipras, the Greek prime minister, asked to meet Jean-Claude Juncker on Saturday but was spurned by the European Commission president rankled by the Greek leader’s denunciation of his efforts to broker a bailout deal..
In a fiery speech before the Greek parliament Friday night, Mr Tsipras lashed out, saying he was “unpleasantly surprised” by the offer made by Mr Juncker, calling the proposals “absurd” and “irrational, blackmailing demands”.
“I would like to believe that this proposal was an unfortunate moment for Europe, or at least a bad negotiating trick, and will very soon be withdrawn by the same people who thought it up,” Mr Tsipras told the Greek parliament.
According to a senior official with a Group of Seven delegation, which began gathering in southern Germany on Saturday ahead of a two-day summit of the leaders of the seven leading industrialised powers that begins Sunday, Mr Juncker believed Mr Tsipras’ speech in parliament left little to discuss.
“Unless he seriously addresses the issues, there’s no reason to meet,” said the G7 official..
Mr Juncker’s rejection of a meeting with Mr Tsipras returns the bailout talks to a point of stalemate just a week after creditors believed the talks were making progress for the first time in nearly four months.
Many officials believe a deal to release €7.2bn in desperately-needed bailout aid needs to be reached ahead of a June 18 meeting of eurozone finance ministers so that Athens has enough time to implement an agreed set of economic reforms in order to get the rescue funds before the bailout expires at the end of the month.
Without the €7.2bn in aid, Greece is expected to default on the €1.5bn IMF bill as well as two large sovereign bonds held by the ECB which come due in July and August totalling €6.7bn.
Greece (1/2) Hard to see what Greek prime minister wants to negotiate about with his partners after flatly rejecting their last proposals.— Johan Van Overtveldt (@jvanovertveldt) June 6, 2015
Greece (2/2) it's hard to avoid the conclusion that the Greek government does not want to accept the rules that make up a monetary union.— Johan Van Overtveldt (@jvanovertveldt) June 6, 2015
A senior Greek official, however, denied that Mr Tsipras had requested a meeting with Mr Juncker. The official said Greece’s differences now lie with Berlin, not Mr Juncker in Brussels.
- GREEK PROPOSAL REMAINS ON THE TABLE, GREEK GOVT OFFICIAL SAYS