It has been revealed that Yanis Varoufakis and a small group in SYRIZA had a plan to deal with a 'Grexit', which had the approval of the Prime Minister. Many within SYRIZA would prefer to leave the Euro but the Greek people in general want to remain part of the Eurozone. Thus, the plan would only be required if 'an accident' occurred and Greece found itself out of the Eurozone. This Plan B would have been a useful negotiating tool to see how far the EU was prepared to go to keep Greece in the Eurozone but once Germany introduced the possibility of Greece leaving, albeit temporarily, then 'Grexit' as a negotiating chip was rendered useless. However, it would have been irresponsible of Yanis Varoufakis not to have a Plan B and now he is being vilified for this, even by people who criticised him for not having made plans for a Grexit. The main criticism of Varoufakis on this blog has been in relation to his style, which is abrasive, but it still doesn't take away from the fact that he makes sense economically. At present, it is hard not to believe that the latest plan is designed to fail, resulting in Greece exiting the Eurozone. The IMF will not support this 3rd bailout without debt write down and the EU will not agree to any reduction in Greece's debt. Under the latest agreement, more austerity measures are being introduced, which will make it even more difficult for Greece to pay its debts as these measures will further depress economic activity. Take the increase in VAT: this is supposed to bring in an extra €2.6bn but this in very unlikely, taking the compliance with paying VAT into consideration, so the figure will be below budget forecasts, resulting in a shortfall and pressure from the creditors for more measures to offset this budgetary gap. This cycle has been happening since 2010 and Greece is far worse off now as a result. Perhaps the scene is being set whereby Greece is forced out of the Eurozone. Then the EU and IMF can blame one another, SYRIZA can blame both and everyone (and that includes SYRIZA) gets what they want - Grexit.
http://www.project-syndicate.org/commentary/varoufakis-agenda-defended-by-mohamed-a--el-erian-2015-07
16/07/2015
The point that SYRIZA did not hit the ground running in relation to reforms was previously made on this blog (11/05/2015 for example) yet the reforms agreed with the EU are now stated ( correctly ) to have always been necessary by Alexis Tsipras. Why then did SYRIZA not have a plan devised over the months from August 2014, when it was a government-in-waiting? Possibly because they would not have been elected had they published such a plan. The fact that SYRIZA is a combination of diverse groups merged into a single party would also make it difficult, if not impossible, to have an agreed manifesto that everyone in the party could sign up to and support. This explains why not having a clear plan worked initially i.e. to get SYRIZA elected but led to the negotiating difficulties encountered later. The fact that leaving the Eurozone was not an option was the main weakness in SYRIZA's negotiating strategy because the creditors were aware of this and only had to threaten it to force SYRIZA to capitulate. Had SYRIZA prepared a plan for 'Grexit', then the negotiations may have had a different outcome, or at least would have revealed if the EU were prepared to allow Grexit to happen. As things stand at the moment, we will never know the answer to this question. Also, if SYRIZA had voluntarily implemented some of the reforms forced on them by the EU, which they now say are necessary, then the issue of trust could not have been used as a stick to beat them with in the final phase of the discussions. However, this may also have been a negotiating stance not to give anything for nothing. Finally, one can only conclude that membership of the Eurozone as a debtor country and being anti austerity are mutually exclusive and if 'The Left' want to govern in any of these countries - Greece, Spain, Ireland, Italy or Portugal then leaving the single currency is the only option.
http://www.theguardian.com/commentisfree/2015/jul/16/syriza-greek-alexis-tsipras?CMP=share_btn_tw
13/07/2015
Criticism of Alexis Tsipras as a traitor is totally uncalled for and disingenuous. A decision had to be made in the context of SYRIZA's mandate to remain in the Eurozone and while many (including myself) thought the treatment he received at the Eurogroup meeting warranted a walkout, he stuck in there representing the Greek people for an agreement. At least people know what 'European partners' and solidarity mean now.
13/07/2015
This article outlines the issues related to the financial crisis is Europe in general and the Greek crisis in particular. The point about short-termism is well made, as austerity will make German goods unaffordable in many EU countries. The same applies globally to the concentration of wealth in the hands of 'a few'. The less people have, the less they can buy, which will ultimately affect industry and services. Where will J.P. Morgan, Goldman Sachs etc. be when the real economy hits the skids? Moreover, if a boycott of German goods was initiated in some of the peripheral (austerity) countries, it could gain momentum via social media platforms and have a further negative effect on the German economy. Perhaps Wolfgang Schaeuble should do a cost/benefit analysis on the long-term effects of austerity on the German economy. It would probably be better to stop forcing austerity on the weaker EU countries, otherwise, Germany may lose more than it gains financially under the current policies, apart from the damage being done to the concept of the EU by the current so-called solutions
http://marianamazzucato.com/2015/07/13/greece-and-the-eu-a-macro-and-micro-mess-up/
11/07/2015
If this is true, the Greeks should walk away from the Brussels talks again and leave the Eurozone.
This is Germany's plan—all of it—to make Greece sell €50bn of "valuable assets" or leave the euro for at least 5 yrs
09/07/2015
According to reports, Greece is going to submit proposals to take another €12bn out of its economy (which has shrunk by 25%) to borrow another €50bn to add to what everyone agrees is an unsustainable debt that can never be paid back. It's the same as giving more loans to a family that can't pay its debts and imposing a €100 pay cut on the wage earners in the family. Is the world gone mad?
05/07/2015
Today will end the current phase of the Greek crisis and the result of the referendum will begin a new chapter in the ongoing saga. One way or another, there is a very difficult road ahead for Greece. A 'no' vote is probably the best option but it is difficult (as always) to know how this will play out after the result. Taking most people's inherent opposition to change or aversion to risk into consideration, a 'yes' of the order of 55% is very likely.
22/06/2015
There are positive rumblings from the Eurogroup in relation to the latest proposals from the Greek government. Perhaps this episode of the Greek saga is drawing to a close and the question must be asked; was Tsipras playing a shrewd game, taking the opposition within SYRIZA to an agreement into account? If the current proposal forms the basis of an agreement then there it will be opposed by elements within SYRIZA, such as the Left Platform. However, by dragging out the talks until the last minute, Tsipras may have outflanked the opposition in his Party. First of all, it's too late to be told to go back and get more. Moreover, there are a number of options available for passing the proposal through parliament. Firstly, the government can pass it by a majority vote of SYRIZA and Independent Greeks (ANEL). Secondly, the opposition could be asked to support the proposal. The Potami Party has indicated that they will support any proposal to keep Greece in the Eurozone. Also, more recently New Democracy has urged SYRIZA to make an agreement. Failing that, SYRIZA could call a referendum on the proposal or indeed call an election based on the proposal and, considering the fact that the vast majority want to stay in the Euro, SYRIZA would probably be re-elected with an overall majority. Before the election, Tsipras could eject anyone opposed to the party line from SYRIZA to ensure there would be no problems when the new government takes office. While this is speculation and conjecture it is still a plausible context for the discussions.
15/06/1950
The breakdown of the talks between Greece and the EU in Brussels over the weekend was entirely predicable. Pressure is being piled on Tsipras to 'fold' and agree an acceptable solution with the creditors. According to the article below, Germany will not agree to any more funds for Greece unless the IMF is involved, which strengthens SYRIZA's hand, as the IMF has walked out of the talks. This is because the IMF want a reduction in Greek debt - a measure opposed by Germany, so the IMF and Germany will have to sort out their differences if a solution is to be found. This is why Tsipras has hardened his stance following the breakdown in the talks. The European side continue to insist the ball is in Greece's court but from a Greece perspective, it is in the creditors court and that's why Tsipras is quoted in the second article below as saying "We will wait patiently for the institutions to move toward realism". It seems Tsipras is not backing down in this game of 'chicken' and has a good negotiating position, whereby the the EU (Germany) and the IMF have to get their act together or Greece will default. If that happens, then the blame game will really begin.
http://ekathimerini.com/4dcgi/_w_articles_wsite1_1_15/06/2015_551052
http://ekathimerini.com/4dcgi/_w_articles_wsite1_1_15/06/2015_551051
26/05/2015
The article below has a very interesting take on the discussions between Greece and its creditors. As the days pass, there is increasing uncertainty among Greeks as to what will happen - whether there will be an agreement or Euro exit. There are all sorts of conflicting opinions and reports circulating in the international and Greek media and it's difficult to get a clear picture of what's happening. There is a lot of brinkmanship from all sides, with statements being made to 'up the ante', depending on which side of the fence you are on. The EU and IMF have the same message - not enough is being done, no specifics in the Greek proposals and time is running out. On the other hand, one or two Greek government ministers are saying the next payment to the IMF on June 5th will not be made in the absence of a deal. Of course another minister has denied this so it's hard to fathom what the real situation is at the moment. Each time it appears the endgame in in sight, another deadline passes and the charade goes on but June is a key month because the previous bailout agreement ends in June, necessitating another agreement. The solution will probably be to continue to 'muddle through' and hope for .................. what?
http://www.forbes.com/sites/francescoppola/2015/05/25/greece-the-eu-and-the-imf-are-dancing-with-death/
21/05/2015
Reform not stimulus is what Greece needs according to this article from Bloomberg. This is a well-constructed article and underscores the point argued consistently here - that it will probably be impossible for any Greek government to implement the type of reforms necessary to transform the Greek economy into the type of modern, free-market economy necessary in today's globalised world. In a post below on 12/03/2015 a comparison between Greece and Ireland is made and the conclusion is that a radical economic transformation is required in Greece to approach the average EU economic indicators. Again the question must be asked: Can any Greek government implement the changes necessary to modernise the economy?
http://ekathimerini.com/4dcgi/_w_articles_wsite3_1_21/05/2015_550233
21/05/2015
The attached article below supports the opinion laid out in this blog on 15/05/2015. Basically, SYRIZA has done nothing to reform the Greek economy and it would appear that the faction within SYRIZA who want to return to the Drachma is gaining momentum. It is hard to disagree with most of the points expressed here in that everything from the government is expressed in general terms, with very little specifics. The arguments about healthcare and education are well made and accurate.
Another recent negative is the proposal to give a 3% reduction in VAT for card transactions, which seems to have been rejected by the creditors. However, for a party like SYRIZA to consider this option, which incidentally was also contemplated by the previous government, is totally against everything SYRIZA claims to stand for. While a reduction in VAT for card transactions would provide an audit trail for transactions incurring VAT, it would have the effect of making these goods and services 3% more expensive for those without cards, e.g. people on low incomes. That would be totally against the policy of SYRIZA in tackling the 'humanitarian crisis'
http://greece.greekreporter.com/2015/05/21/greek-debt-what-is-an-honest-deal/
15/05/2015
It seems there was internal arguments last night about the extent of the concessions by SYRIZA in the ongoing negotiations. The 'political secretariat' of the Party has issued a statement saying SYRIZA will not back down on its "red lines". It goes on to state
"the red lines of the government are also red lines of the Greek people, expressing the interests of workers, the self-employed, pensioners, farmers and young people."
It's all well and good to 'express the interests' of workers, pensioners etc, however it might be better to actually protect these interests. Most analyses of the current situation show that very soon Greece will not be able to pay pensions or public servants, for example, without receiving money from its creditors. It's clear to most people that this will not happen unless an agreement is reached soon. On the other hand, failing to reach an agreement will result in a default, with Greece either remaining in the Euro or exiting the single currency. The outcome of this is very uncertain but there is no doubt that, one way or another, the purchasing power of pensioners and public servants will be seriously eroded following the resultant devaluation of the New Drachma, parallel currency or whatever means is used to keep Greece running after such a default. These statements loaded with emotive language are all well and good for internal consumption but they won't "put food on the table" when the money runs out. There have been no positive statements from within SYRIZA related to these discussions so, as stated before, it looks like most of the Party are more comfortable saying 'NO', not coming forward with alternatives (apart from asking for more money from the creditors) and making lofty political statements, which in practical terms are meaningless.
http://ekathimerini.com/4dcgi/_w_articles_wsite1_1_15/05/2015_550058
11/05/2015
The article below in today's eKathimerini sums up the problems Greece is facing at the moment. The points about the lack of a plan have been made many times on this blog. The fall in support for populist leftist parties, such as Podemos in Spain and Sinn Féin in the UK elections is evident now and in the main, brought about by the failure of SYRIZA to achieve any concessions.. While the message from SRYIZA in general and Varoufakis in particular as regards the effects of austerity is correct, the way they are going about achieving any success is a disaster. There are various reasons for this, such as pre-election promises and the stance being taken by the 'Left Platform' within SYRIZA. However, it seems there is not now, and there never was, a vision about reforming Greece. It is also safe to assume there was no Plan B if the original plan of negotiating a reduction in the debt burden failed. A total capitulation by SYRIZA would seem to be the only way to avoid an eventual 'Grexit', whether it's a default and remain in the Euro or default and leave the single currency remains to be seen.
http://ekathimerini.com/4dcgi/_w_articles_wsite3_1_11/05/2015_549889
27/04/2015
The media outside Greece is definitely getting tired of the continuing saga related to the Greek debt discussions. Also, it appears that many of the main players representing the creditors are also fed up that the ongoing talks have failed to produce an agreement. This could be termed 'Gretigue' where everyone is being worn down to the point that they just want an agreement reached. This is a negotiating strategy that can be used to wear out the opposition and get a better deal. In theory, if Greece believes it will not be ejected from the Euro currency, then this is a good strategy. The scenario then is: the majority of Greeks want to remain part of the Eurozone so SYRIZA will not voluntarily leave, Greece won't be pushed out and will be kept afloat until eventually both sides come to an agreement. The talk of Greece exiting the Eurozone has increased but this is only talk at the moment so expect more deadlines to be reached and passed until a solution is found. Yanis Varoufakis has consistently stated that an agreement will be reached but with great difficulty. Time will tell (literally) if he's right.
24/04/2015
The situation developing in relation to the Greek debt crisis may be counter-productive to the EU and the position it has taken as regards the 'Talks'. The rhetoric from some EU ministers and leaders is becoming personal, while it appears that in public at least, the Greek government are dignified and genuinely looking for a compromise. They have not always behaved like this but they are learning. The criticism of Tsipras about his meeting with Merkel is an example. Some members of the Eurogroup have criticised him for 'going outside the process' and above their heads but Greece is in a serious situation and the Prime Minister must do whatever needs to be done to solve the problem. In addition, Varoufakis has been call a time-waster, a gambler and an amateur, which seems to be a reaction to his disruptive tactics in challenging conventional economic orthodoxy and even current negotiating practices. Obviously he 'is getting to' the Eurogroup and they don't like it. The criticism could re-bound on the EU and garner more sympathy for Greece than they have from other EU countries at the moment. (article below not directly related to this post)
http://www.bloombergview.com/articles/2015-04-22/europe-s-collision-course-with-greece
15/04/2015
The majority of reports about the current negotiations between Greece and its creditors indicate that very little progress is being made. There are several repayments to various creditors due in the coming weeks, as well as the payment of salaries to the public service and monthly pension payments this month. If a breakthrough is not made and some funding delivered to Greece, then a default is inevitable. Although some people think leaving the Eurozone will benefit Greece, it is more likely to be a disaster for the Country. It is hard not to believe that SYRIZA wants to be ejected from the Eurozone, as mentioned in earlier posts. There are cards the negotiators could use to force the hand of the creditors. For instance, there is a big increase in the numbers of illegal immigrants entering Greece (see below) and over 100,000 are expected to arrive in 2015. Most of these are refugees fleeing conflict in countries like Syria. Greece made a repayment of €450m to the IMF on April 9th but it begs the question why the government did not refuse to pay this on the basis that the money was needed to help the thousands of immigrants arriving in Greece, in what is a truly humanitarian crisis. Refusal to pay back this money in order to cope with the influx of refugees would give Greece the moral high ground and present a dilemma for the IMF or any other creditor if they insisted on payment under these circumstances. The fact that this card hasn't been played leads to two conclusions; the Government didn't think of it or it wants to default and be ejected from the Eurozone. As mentioned before, the vast majority of Greeks want to remain part of the Euro, so it would be almost impossible for SYRIZA to opt out of the Euro on behalf of Greece but it's a different matter if they were to be 'kicked out'.
http://ekathimerini.com/4dcgi/_w_articles_wsite1_1_14/04/2015_549075
01/04/2015
The divisions among the various groups that compose the SYRIZA Party have been highlighted on a number of occasions and this issue is not being addressed. Most people in Greece desperately want the new government to achieve some measure of success but the current environment is exacerbating the already difficult position the government is in vis-a-vis the negotiations with the 'Institutions'. Government ministers are continuously speaking out on issues (a) that should not be referred to while negotiations are taking place and (b) areas that are not part of their remit as ministers. These ministers do not seem to realise they are part of a government with the collective responsibility of managing the political and economic affairs of Greece. The fact that the 'knives may be out', if and when the negotiating team arrive back with a deal, must surely add extra pressure on Greece's representatives at the talks. It seems that the Greek people continue to be badly served by the politicians they elect to represent them.
http://ekathimerini.com/4dcgi/_w_articles_wsite3_1_01/04/2015_548687
28/03/2015
SYRIZA seem to be very slow learners when it comes to negotiating or, as mentioned on March 18th, the actual agenda is for Greece to be ejected from the Eurozone. In the case of the former, it is stupid to present a set of options with the inference that if the proposals are rejected, the Greek Government is prepared to "go its own way". There are two possible scenarios here: The Government feels the measures may not be sufficient to satisfy the Brussels Working Group and it is applying the pressure of a Greek default to have them accepted or the veiled threat will antagonise the Working Group to such an extent that the proposed reforms will be rejected , also eventually resulting in a default. The fact that this caveat has been verbally added by a SYRIZA government minister implies there is no room for negotiation and / or compromise in relation to the list of reforms. One way or another, it's a high stakes game being played by SYRIZA, one which could lead to an exit from the Eurozone.
http://www.theguardian.com/business/2015/mar/27/greece-submits-reform-proposals-to-eurozone-creditors-with-a-warning?CMP=share_btn_tw
20/03/2015
It is unfortunate that the Irish Prime Minister (Taoiseach) launched a very aggressive attack on the Greek Government yesterday. However, it was predictable for two reasons related to the upcoming general election in Ireland, probably in Spring 2016 Firstly, the coalition government in Ireland is very anxious that Greece does not win any concessions in terms of debt reduction or implementation of the bailout terms, as it would be viewed (correctly)that the Irish Government achieved nothing. This would create a more negative impression in people's minds about the performance of the coalition. The view of most people in Ireland is that the government broke every promise it made prior to the election in 2011. Secondly, the government has requested a 'relaxation' of the budgetary rules under which Ireland must operate, even though Ireland is supposed to have exited the bailout. The purpose of this is to 'buy' votes in a give-away budget in order for the government to be re-elected. The subliminal message from Enda Kenny is that if his government is not returned to power, then there may be another "SYRIZA-type' situation in Ireland following the general election. Enda Kenny's comments are a contradiction in terms on the basis that there is to be no slack cut for Greece but he is there 'cap in hand' looking for concessions. The Greek government is fighting very hard on behalf of the citizens of Greece. While it may lack the diplomatic skills and tactical nous to operate at European level, it is standing up for its people. The backbone being shown by the Greek government is in stark contrast to the 'fight' the Irish Government put up on behalf of its citizens so perhaps embarrassment is another reason for the Taoiseach's remarks
http://www.independent.ie/irish-news/politics/taoiseach-launches-scathing-attack-on-athens-31081129.html
18/03/2015
Jeroen Dijsselbloem, the chairman of the Eurogroup, has hinted that capital controls may be imposed on Greek banks if the current rate of withdrawals continues or increases. The efficacy of this measure is debatable and it's argued in the article below that it would only assist Greece in the very short-term. A government spokesperson more or less told him (Dijsselbloem) to mind his own business and not go beyond his remit. The government did make an interim agreement with the Eurogroup, so it it is wrong to accuse Dijsselbloem of interfering, and he is more likely trying to get the government to show some urgency in presenting and implementing 'agreed' proposals. In the absence of further funding, there is general agreement that Greece will run out of cash before the end of the month and there seems to be no movement from the government to implement any reforms, which is what Greece's creditors have insisted on. Moreover, the rhetoric from SYRIZA and Alexis Tsipras is becoming more confrontational, which is not conducive to finding a solution.
On that basis, it seems reasonable to assume that SYRIZA is gambling on not being ejected from the Eurozone and hoping for a political solution. SYRIZA is playing a smart game and may actually want to take Greece out of the Eurozone but if they moved to Grexit, it would be against the wishes of the majority of Greeks. Varoufakis is on record as being against the single currency but the SYRIZA mandate precludes leaving the Euro. However, if Greece were ejected, then the government could claim it was merely pursuing its mandate to eliminate austerity and the decision was made elsewhere, thus letting SYRIZA off the hook. This would add up to a win, one way or another for SYRIZA, in that they would get a political solution or be out of the single currency.
While the debate is focussed on macro-economic issues, there are changes at the micro level that could be implemented. For example, the requirement to get three different doctor's notes to go to a public swimming pool is just an example of the type of restrictive practices that exists in Greece. The Troika identified hundreds of these restrictive and anti-competitive practices, none of which, like the example above, add any value and just take disposable income out of people's pockets. The very people that this money is directed towards (doctors) are among the groups of people alleged to avoid paying income tax, which underscores the lack of value add to the economy. It is disappointing that SYRIZA does not seem to have any plans to reform Greek society or if they do, then they are not moving ahead very quickly. There is an impasse at macro level, which should give the government plenty of time to make internal changes and reforms in the economy but that's not happening either.
Stasis is a Greek word!!
http://openeurope.org.uk/blog/how-likely-are-capital-controls-in-greece/
12/03/2015
The chart below gives a picture of key statistics related to Greece 2008 - 2014. Greece was always one of the poorest countries in the EU and the chart shows that in 2008, it was worse than the European average in 7 of the 8 indices. The fact that Unit Labour Costs in 2010 are at the EU average is strange in the context of some of the other figures, such as the Unemployment Rate and Median Income. The economic crisis has drastically worsened Greece's performance vs the EU as can be seen from the 2014 figures, Internet access being the exception.
Ireland, on the other hand, has the highest number of people under 25 in the EU, although during the crisis, tens of thousands have emigrated. The workforce is well-educated and English is spoken. Ireland attracts a huge amount of foreign direct investment (FDI), especially in the areas of pharmaceuticals and IT. Most of the FDI is from US multinationals, who want access to the European single market. It must be acknowledged that the multinationals tend to skew GDP figures and there are issues around Corporation Tax Rates but they still provide a significant number of well-paid jobs, as well as supporting indigenous companies that provide goods and services for them. Ireland also has a highly lucrative agricultural sector, which exports worldwide. The institutions of the state - the Dáil (parliament), judiciary, local government and tax collection (Revenue Commissioners), while not perfect, function reasonably well. Finally, there is legislation related to trade unions, which provides a stable industrial relations environment for businesses. Indeed, many of the multinationals, such as Microsoft, Google and Yahoo for example are not organised and usually have a 'no union' policy.
Despite what all Greek governments have said since 2008 about going for growth, the question remains where is this growth to come from. No concrete suggestions have appeared and it will take a massive transformation to reorganise the country to make it attractive to any investor. What industries could be attracted to Greece? Can Greece build up any indigenous industries capable of exporting goods or services? Will SYRIZA be able (where others have failed) to make the reforms and changes to create the conditions necessary for businesses to thrive? Growth is aspirational and just a general term without any meat on the bones. It's akin to suggesting applying "innovative solutions" to solve problems, without defining what form these innovative solutions should take. Greece was one of the poorest countries in the EU 20 years ago and nothing has happened in the meantime to change that. The standard of living did rise during that period but it was mostly based on unsustainable government borrowing and largesse. Unless there is a radical transformation in Greek society it is hard to visualise Greece making up the ground to come anywhere near the EU averages on the chart above.
The article below entitled "The Agony of Greece" is from The Economist and contains a number of graphs and charts (two of which are used above) which outline the difficulties facing Greece.
http://www.economist.com/blogs/graphicdetail/2015/03/daily-chart-0
10/02/2015
Reality bites indeed. The article below from MacroPolis website relates to the current treatment of Greece by the European Central Bank (ECB). The nub of the argument is that rules are being strictly applied to bring Greece to heel in this instance, whereas in other cases, the rules have been bent by the ECB. Particular attention is given to the 'Promissory Notes' agreement with Ireland, which resulted in substantial savings to the Irish Government and Irish taxpayers.
It seems that if you cooperate with the EU, for example by fulfilling the terms of the various memoranda, then some leeway will be forthcoming. This explains why Enda Kenny (Prime Minister) and Michael Noonan (Minister of Finance) have been advising Greece to collaborate with the EU in tackling the problems in Greece. It would seem they are right in that outright opposition to the 'former Troika' is leading to nowhere at the moment. The key point now is, while the Irish Government was prepared to depart from its pre-election opposition to the bailout memorandum, is SYRIZA prepared to do the same?
The referendum idea, which was floated in the past few days, could be very misleading for ordinary people. For example, if the subject of the referendum is whether to remain in the Eurozone or not then it will be carried. This will give the government licence to do 'whatever it takes' to remain part of the Euro currency and the referendum result will be cover for SYRIZA for doing an even bigger climbdown on its pre-election promises. Whether internally the party is prepared to fulfil the agreement reached by the last government is questionable, even with a mandate to remain in the Eurozone.
On the other hand, if a referendum on a memorandum were presented, it would probably be rejected with the likely result of Grexit. While conditions in Greece are very harsh for many people at the moment, the hardship associated with an exit from the single currency is not fully appreciated or understood, even by so-called experts. A referendum on a memorandum, if supported by the government, would probably result in a split in SYRIZA and would also be a major problem for the other coalition party, Independent Greeks, who are opposed to the bailout. The only positive aspect (if it could be referred to as such) of this step would be to open the debate on the consequences of Greece leaving the Euro.
However, going back to the here and now, the message from the ECB seems to be play ball or get off the pitch.
http://www.macropolis.gr/?i=portal.en.the-agora.2329&itemId=2329
09/02/2015
After the initial euphoria, the performance of the new government has been disappointing. During the first few weeks the impression was given that SYRIZA had a strategy in relation to the economy and a blueprint for re-organising Greek society. A debt write off was to be pursued because SYRIZA said it had a mandate from the Greek people to achieve this objective. The 'oligarchs' were to be tackled in the context of a crack down on tax evasion, minimum wage to be restored to €751 per month, civil servants re-hired and some pensions increased.
It is now obvious that no such plan exists and the government is being compared to left-wing 'coffee-shop intellectuals' - great at talking but not much in the way of action. Alexis Tsipras has recognised this and told his cabinet (including Varoufakis) "less talk and more action". The letter sent to the Eurogroup at the weekend has seven proposals which vary from non-specific in detail to downright silly. The article below sets out a reasonable response to the letter, which was, inevitably, leaked.
https://medium.com/bull-market/greek-reform-proposals-a-first-review-58db3fe9436d
While there are difficulties with the policy or lack of policy from SYRIZA, there are also problems with the method of negotiation being employed by the government. The proposals were sent to the EU and there have been negative reactions from some of the players. However, there should be no comments from anyone in the government until an official response is received. Talking about a referendum if an agreement can't be reached is stupid and naive, especially when dealing with experienced EU negotiators. If the government continues 'blundering around' like this, Greece will be out of the Eurozone in no time.
The process necessary for Greece to survive as a member of the Eurozone must be incremental in nature with a long-term horizon. SYRIZA is in a unique position to do this because it has no political baggage and should be able to make the necessary reforms. However, the debt write-down was not achieved and SYRIZA accepts that it will not happen. Moreover, instead of the large-scale tax evasion by big business being tackled, 'tax spies' are to be employed to catch small businesses like restaurants, shops and kiosks that don't issue receipts. This is a far cry from the stated objectives of SYRIZA before the election. Furthermore, rather than a 'citizens card' for interfacing with the public service being issued, Business Process Re-engineering (BPR) needs to be undertaken in the public service to make it more efficient and that will take time.
It now looks as if SYRIZA will have to conform to the terms of the memorandum if Greece is to continue to be funded from Europe. The alternative is to hold a referendum, according to some government sources but what is the referendum to be about? Is it to be about membership of the Euro or acceptance or otherwise of a memorandum. The most important thing about a referendum is the question that's asked. Where this will end is hard to forecast but 'Grexit' appears to be more likely with each passing day.
