Category: Yanis Varoufakis

Greek prime minister blames creditors for lack of deal

1/6/2015

Greek Prime Minister Alexis Tsipras

Although formerly expressing continuous optimism that Greece and it creditors the "institutions" or Troika as they were formerly called, would soon reach a deal, Alexis Tsipras, the Greek Prime Minister, lashed out at creditors whose intransigence he blames for failure to reach a deal by yesterday.

In the French newspaper Le Monde Tsipras said: “The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance. It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

There are signs that leftist members of Syriza are becoming impatient with both prime minister Tsipras and the finance minister Yanis Varoufakis as they abandon former red lines on taxation and privatization.

Tsipras announced that he was willing to give way even further on anti-austerity demands. Polls show that a majority of Greeks are in favour of reaching a deal even if anti-austerity demands are not met.

The issue of pension and wage cuts have been red lines so far that have kept creditors from agreeing to a deal.

The creditors insist the austerity measures in the original agreement be agreed to and implemented.

Tsipras spoke by telephone with German Chancellor, Angela Merkel as well as French President Francois Hollande on Sunday evening. All agreed on the need for a quick agreement.Leftist members of Syriza were incensed when Varoufakis appointed Greek-American economist Elena Panaritis as Greece's representative for the International Monetary Fund (IMF). Panaritis had earlier represented the pro-bailout Pasok party as an honorary MP.

Some 43 Syriza members including deputy prime minister Yannis Dragasakis signed a petition opposing the appointment. In spite of the cash crunch Greece faces , the Economy Minister George Stathakis said that Greece had internal resources that would allow it to make a 305 million euro payment to the IMF on June 5. Nevertheless, it is becoming more and more difficult for Greece to meet debt payments without more cash making a quick agreement a necessity. At the same time many in Syriza want the party to adopt a Plan B that would develop strategies for the way forward, or perhaps "outward", should the government fail to reach a deal acceptable to the party.

Sources:
http://uk.reuters.com/article/2015/05/30/uk-eurozone-greece-voutsis-idUKKBN0OF0AC20150530

http://www.telegraph.co.uk/finance/economics/11636411/IMF-openly-warns-of-Grexit-as-judgment-day-approaches.html

http://www.reuters.com/article/2015/05/31/eurozone-greece-idUSL5N0YM0RI20150531

http://www.theguardian.com/business/2015/may/31/greece-alexis-tsipras-lambasts-absurd-proposals-creditors-for-debt-deal-failure

0 Comments

Greece makes loan payment but still no deal

12/5/2015

1 Comment

ECB Euro symbol

Greece yesterday began payment of 750 million euros ($834 million) in debt interest owed to the International Monetary Fund (IMF) The move was made to show eurozone finance ministers meeting in Brussels that Greece would meet its debt payments.

The Greek government has had to borrow from pensions funds and local governments as well as dipping into its reserves at the IMF to meet the payment. After the Brussels meeting, the finance ministers said that there had been progress in the talks but there was more work needed to reach a final deal. No further cash was released. There are 7.2 billion euros left to be disbursed but the creditors are insisting that the conditions stipulated in the original agreement including reforms to the labor market and pensions must be met before any further funds are released.

The Eurogroup issued a statement that said in part: "We welcomed the progress that has been achieved so far ... At the same time, we acknowledged that more time and effort are needed to bridge the gaps on the remaining open issues." Jeroen Dijsselbloem, of the group said that more time was needed to reach a deal but that there were both time constraints and liquidity constraints but he hoped an agreement could be made before money ran out.

The Greek Finance Minister Yanis Varoufakis said that Greece had only a few weeks before it would face a liquidity crisis and default on payments. The IMF is said to be already working on a contingency plan to deal with a potential Greek default. Greece has not received any payouts from its bailout loan since last August.

The talks between Greece and its creditors have now been ongoing for more than three months with little progress reported until recently. Finance minister Varoufakis noted that there had been progress on privatization and tax reform. As Varoufakis notes, the progress had been mostly because of concessions by the Greek government including on issues that were supposed to be "red lines" not to be crossed. Nevertheless he said that the discussion including his own with Wolfgang Schaeuble, the hard line German finance minister had been the friendliest yet.

Somewhat surprisingly Schaeuble said that it might make sense for a referendum to be held on any deal that was reached so as to give the Greek government a mandate to go ahead with painful austerity demands. Previously the EU has been opposed to any such move as destabilizing markets. Schaeuble's position fits in with that of Syriza MP Costas Lapavitsas that any deal needs a clear mandate from the Greek people. As any deal is bound to break election pledges there could be rebellion within the party even if a referendum were to be passed by the Greek electorate. Polls show that Greeks are so anxious to stay within the eurozone that they want to do so even if Greek anti-austerity demands are not met.

Even it Greece is able to make it through to the end of June when the present bailout ends, it will face huge payments in July and August to the European Central Bank. While press reports emphasize the negative consequences of default and abandoning the eurozone currency union, history shows that results of leaving a currency zone vary considerably with some results causing considerable hardship but others almost immediate benefits.

Sources:
http://www.nytimes.com/2015/05/11/business/dealbook/imf-and-central-bank-loom-large-over-greeces-debt-talks.html
http://www.theguardian.com/business/2015/may/11/greece-repays-750m-loan-instalment-to-imf-early
http://www.theguardian.com/business/live/2015/may/11/eurozone-finance-ministers-meeting-greece-deadline-live#block-5550ae3fe4b00a7880f44731
http://www.theguardian.com/business/live/2015/may/11/eurozone-finance-ministers-meeting-greece-deadline-live#block-5550ee7ae4b0cbc5d999a83f
http://www.aljazeera.com/news/2015/05/150511192445041.html
http://www.ft.com/intl/cms/s/0/ddb97ae8-f899-11e4-be00-00144feab7de.html#ixzz3ZvglInOT

1 Comment

EU Finance Ministers make plans for Greek default

27/4/2015

1 Comment

Headquarters of IMF in Washington DC

At a meeting of the Eurogroup finance ministers in Riga Latvia on Friday, there was no breakthrough deal with Greece. The chair of the group of 19 finance ministers, Jeroen Dijsselbloem said that he hoped the meeting would create a sense of urgency that a deal had to be reached soon.

Many ministers criticized Greek finance minister Yanis Varoufakis for failing to come up with a list of reforms the group could accept. Greece has refused to budge so far on "reforms" to pensions and other demands that would go contrary to the anti-austerity program the main government party, Syriza, promised voters they would implement.

However, such measures are part of the requirements of the extended bailout loan. Creditors have made it clear that no cash will be released until they are satisfied the terms will be met. So far there is no sign that Greece is willing to do so.

Given the impasses so far, it is not too surprising that German Finance Minister Wolfgang Schaeuble hinted that the group was beginning to develop plans for a possible Greek default on its debt payments. Asked by reporters after the Friday meeting whether the finance ministers were working on a "Plan B" in case negotiations for funding Greece fail, Schaeuble said: “You shouldn't ask responsible politicians about alternatives.” He said that if he answered in the affirmative he could trigger panic. Schaeuble suggested that secrecy was necessary and drew a parallel with plans for German reunification in 1989.

French Finance Minister Michel Sapin said that there is just plan A: "There is only one plan, and that's Greece in the euro. Greece in Europe." The earliest next date for a deal is on May 11, just one day before Greece is scheduled to make a large payment to the International Monetary Fund(IMF). Pierre Moscovici, the EU top economic official warned:"We should move faster, because time is running out, financial difficulties are there as well as the commitments made. Greece must remain in the eurozone." Since May 2010 Greece has relied on a bailout loan of 240 billion euros to keep afloat. Austerity conditions imposed have ruined the economy which has shrunk by one quarter and also increased unemployment with almost half of young people unemployed and about a quarter overall.

In an article, in Al Jazeera, Mark Weisbrot, suggests that the strategy of Greek's creditors is to make things so difficult for the left-leaning Syriza government in Greece that support for it will be undermined and it will be ultimately replaced. Already the lack of a deal and possible exit from the eurozone has caused huge runs on Greek banks and depositors worry that their euros may eventually be turned into drachma with huge losses in value. The European Central Bank is cutting off liquidity to the Greek banks as well, as Varoufakis has complained. Weisbrot notes that even many IMF economists believe that the demands being made on the Greek government are too severe.

Reza Moghadan, former head of the IMF European department wrote recently in the Financial Times: “Europe is demanding implementation, in the next few weeks, of a long and comprehensive list of actions that previous governments were unable to deliver in the space of a few years.”

These impossible demands make sense if the aim is for eventual "regime change". However, it is not clear what good this would do as long as the creditors continue the present policy of demands that are politically disastrous for any Greek government to try and satisfy. However, insisting on continuing disastrous policies seems to be a hallmark of EU negotiations with Greece

Sources:
http://news.yahoo.com/greece-offers-concessions-talks-creditors-063638117--sector.html
http://www.dw.de/finance-minister-sch%C3%A4uble-hints-at-preparations-for-a-plan-b-on-greece/a-18408886
http://www.ctvnews.ca/business/there-is-only-one-plan-and-that-s-greece-in-the-euro-french-official-says-1.2344674
http://www.voanews.com/content/plans-for-potential-greek-exit-from-eurozone-played-down/2734353.html

1 Comment

Greek finance minister meets with IMF head

7/4/2015

2 Comments

Headquarters of International Monetary Fund

Greek Finance Minister Yanis Varoufakis was to meet Christine Lagarde, head of the International Monetary Fund(IMF), on Sunday, March 9, in Washington. The meeting was to discuss the planned reforms Greece sent earlier to creditors including the IMF. Greece has been hoping that the reforms would be accepted quickly and funds released to pay upcoming debt of roughly $490 million to the IMF due on April 9. The IMF said the talks would constitute an "informal discussion". Varoufakis is expected to meet US Treasury officials the next day.

Some reports suggest that Greece might not make the payment to the IMF when it comes due if this will not leave sufficient funds for upcoming payment of pensions and government salaries.

There are also suggestions that Greece could nationalize the banks and exit the euro zone by introducing the Greek drachma again.

The Greek Interior Minister actually suggested that Greece would prioritize payment of wages and pensions over meeting the debt payment to the IMF. As has happened several times lately, the government contradicted the statement and said that this was not its position.

Euro zone officials quoted the Greek government as saying it would run out of funds by April 9. The German Magazine Der Spiegel also quoted Nikos Theocharachis as maintaining that Greece would probably not pay the IMF debt on April 9.

Immediately, the Greek Finance Ministry denied Theocharakis' claim.

The Deputy Finance Minister, Dmitris Mardas said on Greek TV: "We strive to be able to pay our obligations on time, We are ready to pay on April 9." Mardas also insisted that Theocharakis had not said that the technical teams sent to Athens to examine the government books were "completely useless".

According to Mardas: "Mr. Theocharakis never characterized the technical teams of the institutions with the phrase attributed to him. On the contrary ... he referred to them as saying they include 'top-notch people with impressive skills.'" Government spokesperson, Gabriel Sakellardis, also gave reassurance that Greece would pay the IMF debt due on time, saying there is "no chance that Greece will not meet its obligations to the IMF".

Belgian Finance Minister Johan Van Overtveldt said that Greece would not be allowed to postpone the payment to the IMF and that no further funds would be released until some of the promised reforms were actually implemented. Greece has not received any bailout funds since August of 2014.

Greece has not been allowed to use its sovereign debt to participate in the liquidity program that enables other euro zone countries to obtain funds. Greece has had to issue more treasury bills and even borrow from state entities to meet payment demands. After the first proposals for reform were rejected, new proposals are being studied.

While EU officials say that there has been progress in talks, they also claim that more work is required before a deal can be finalized.

Greece hopes to have a meeting of euro zone deputy finance ministers on the afternoon of April 8 and even on the morning of April 9.

However, the next meeting of the euro zone finance ministers will not be until April 24.

Sources:
http://www.reuters.com/article/2015/04/04/us-eurozone-greece-imf-idUSKBN0MV0EE20150404
http://www.afr.com/news/world/europe/greece-set-for-imf-meeting-amid-speculation-of-payment-shortfall-20150404-1mepzs
http://www.bloomberg.com/news/articles/2015-04-04/greece-has-cash-to-make-imf-payment-next-week-minister-says
http://www.arabnews.com/news/727961

2 Comments

Greek prime minister blames creditors for lack of deal

Greece makes loan payment but still no deal

EU Finance Ministers make plans for Greek default

Greek finance minister meets with IMF head

Ken Hanly

Archives

Categories