Greek crisis round up – 18 July 2015


– The main news from yesterday is that the German parliament has given mandate to start talks for the 3rd bailout, the new ESM loan, with a vast majority of 439 in favour vs 119 against. A significant fact is the increase of dissent from within CDU/CSU (Merkel’s centre-right alliance) compared to previous votes on Greece. All other countries that needed approval from parliament or special committees to go ahead have now been given mandate to start talks for the new loan (France, Finland, Austria, Latvia and Netherlands).

– EU countries have finalised details for bridge financing to allow Greece to honour upcoming debt repayments and clear arrears. €7.16bn will be provided by the European Financial Stabilisation Mechanism (EFSM) – the EFSM includes non-euro EU countries, British concerns that their money would be used for Greece have been addressed through a system that gives guarantees to non-euro signatory countries in case Greece fails to repay this loan.

– After the extension of ECB emergency liquidity, Greek banks are set to reopen on Monday, but capital controls (weekly withdrawal limit of €420; bans on foreign transfers) will continue for some time after that, according to various sources. This means the reopening is more cosmetic than anything, the viability of Greek banks remains a serious concern and will for some time.

– Ongoing talks around the 3rd bailout are already marked by a major division among the creditors. IMF director Lagarde has emphasised that Greek debt is not sustainable without major debt relief – implying that the IMF might not participate in the new bailout, to follow its mandate of not lending to countries that are not likely to be solvent. EU countries are counting on €16bn or so from the IMF, a substantial chunk of the €85-86bn package for Greece.

– There are also ‘quieter’ calls from all quarters, from international left-leaning economists to right-wing creditor government technocrats, suggesting that in the end Grexit might be the best option for Greece and for everybody else – perhaps it is just a matter of timing and providing a ‘sweet’ Grexit offer when it becomes clear that Greeks cannot or do not want to bear the burden of the harsh conditions imposed by the new bailout.

– Syriza’s internal crisis continues, with the majority of Syriza’s central committee members opposing the deal (109 out of 201;, it’s clear that the rift is much bigger than the numbers of dissenters in parliament. Last night Tsipras has announced a cabinet (mini)reshuffle, confirming Tsakalotos (who replaces Varoufakis), and replacing Lafazanis, energy minister and vocal opponent of the deal – he was also pushing for a gas pipeline deal with Russia, among other things – with former labour minister Skourletis. Other dissenting deputy ministers were also replaced. These are still early stages anyway, we will have to see in the next days – the next votes in Greek parliament connected to the bailout deal will be an important test. Many are now talking about possible elections in autumn.

– Another interesting development is the rising number of prominent left voices in the UK standing against a EU left solution to austerity and neoliberal policies, some hinting at Brexit in view of the 2017 British referendum on EU membership. In fact Cameron’s dangerous play of showing EU failures while hoping for reforms towards more national sovereignty to win a Yes might backfire, with increasing numbers of Tory eurosceptics seriously considering Brexit. The leader of UNITE, the biggest trade union in Britain, is threatening to campaign for a No vote if Cameron pushes for EU treaty changes that weaken workers’ rights. Events in and around Greece in the following months are certainly set to influence the voting behaviour of the British left. A paradoxical effect of the Greek turmoil might be an unlikely convergence of right and left on Brexit, for rather different reasons of course.


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