Greek Leader To Negotiate Another Deal With European Imperialists
By Anthony Faiola and Michael Birnbaum
Washington Post
July 8 at 8:36 AM
ATHENS — Greece asked European partners Wednesday for a new three-year bailout, pledging to make reforms but leaving blank how far it was willing to go to meet cost-cutting demands as the country flirts with bankruptcy.
In the one-page letter , obtained by The Washington Post, Greece proposed to take steps on key issues such as taxes and pension payouts as early as next week. It also pledged to take unspecified “additional actions” to “strengthen and modernize” its economy.
Greece additionally said it “welcomed an opportunity” to explore steps aimed at making its debt “sustainable and viable over the long term” — a nod to its request for debt relief that has met with resistance from some of its leading creditors, especially Germany.
Athens also noted the urgency of its request — with the country’s banks nearly out of cash — and reiterated its commitment to remain within the euro common currency.
Yet any deal will live or die on the details.
And Greece has so far provided very few, leaving European leaders frustrated and warning that time for compromise is running out — less than a week after Greek voters issued a resounding rejection of the previous bailout proposals by euro partners.
A scheduled conference call by European finance ministers to discuss the Greek crisis, meanwhile, was abruptly canceled, suggesting European officials wanted to see more before taking a serious look.
Greek Prime Minister Alexis Tsipras promised “very specific proposals” by Thursday.
Earlier, he delivered an impassioned call on Wednesday for a new deal to European Parliament. It came after an emergency summit of European leaders called to salvage Greece’s financial rescue broke up acrimoniously late Tuesday.
Greece was ordered to deliver a new plan for securing a fresh bailout by late Thursday. It would need to be quickly assessed by European technocrats and then presented to the region’s leaders at a hastily scheduled summit on Sunday.
“The stark reality is that we only have four days left to find an ultimate agreement,” Donald Tusk, president of the European Council, told European lawmakers on Wednesday.
But Tsipras has managed to keep an aura of confidence that Europe will find a way out of the crisis.
At the European Parliament in Strasbourg, France, Tsipras said sounded alternately defiant and contrite. He conceded that Greece’s woes were in large part the legacy of a series of corrupt Greek governments and a long standing culture of tax evasion.
But he also stressed that years of bailout cash thrown at Greece had actually gone to save “European banks” that had previously owned vast amounts of Greek debt, and said that five and half years of enforced austerity had driven the country into the ground.
Any new deal now, he said, needed to take into account the need for growth policies and “debt sustainability” — a reference to contentious Greek demands for some form of debt forgiveness, a stipulation still opposed by some creditor nations in Europe.
“We will continue with our reforms undertaken, but let us not forget that the Greek people have made a tremendous effort for adjustment,” he said. “This has exhausted the resilience and patience of the Greek people.”
Time, however, was running out for compromise as stress grew on Greek’s buckling banking system.
A senior official at the National Bank of Greece who spoke on the condition of anonymity said he was unsure whether the banks would last through Friday. He said employees have been working until midnight to come up with contingency plans but that there was confusion within the bank over what the government’s next steps might be and how they could affect the financial system.
“Now is the time to save the banks and save the people’s money,” he said. “Then we can talk about politics and what brought us here.”
Central to their ability to survive were the actions taken by the European Central Bank, whose directors were scheduled to hold a conference call on Wednesday. The ECB is unlikely to significantly ramp up its aid to Greek banks, but it will need to assess whether slightly more funds may be required to prevent at least one major bank failure by this weekend.
But it is unlikely to completely pull the plug on financing Greek banks while negotiations continued between Greece and its European creditors.
On Wednesday, ECB Governing Council member Christian Noyer said the institution had stretched its rules “to the maximum” to aid Greece, and warned it would need to cut off funds if talks collapsed.
“In the last six months we maintained the lifeline set up for Greek banks and put enormous sums of money on the table,” Noyer told Europe 1 radio, according to Reuters. “Our rules oblige us to stop immediately at that point when there is no prospect of a political accord on a program, or at the point when the Greek banking system crumbles - which would happen if it enters generalized default on all its debts.”
Analysts remained skeptical that European officials could come to a rapid agreement with the Greek government.
“We cannot rule out a deal on Sunday but strong conditionality and commitment to reforms will be required,” economists from Societe Generale wrote in an analyst note on Wednesday.
They noted that any deal would likely require new austerity measures to be passed by the Greek parliament before fully addressing the issue of debt forgiveness.
“The latter condition will be extremely difficult for the Greek government. As a result, we stick to our scenario of 65 percent chance of Grexit,” the economists wrote, using the shorthand for a Greek exit from the euro currency union.
Late Tuesday, following a day’s worth of talks aimed at finding a way out of months of bitter deadlock, European leaders were scathing in their assessments of Greece’s proposals, calling them inadequate and demanding the Greek government return with a detailed plan by Thursday.
Sunday’s meeting of all 28 European Union members will be the final chance to save Greece from economic oblivion — or the moment the country is ejected from the euro zone.
Standing at E.U. headquarters in Brussels Tuesday, European Commission President Jean-Claude Juncker pounded the lectern as he announced that Europe has detailed plans for Greece’s exit from the euro zone — known as “Grexit” — and for delivering humanitarian aid to Athens.
“I’m strongly against Grexit,” he said. “But I can’t prevent it if the Greek government is not doing what we expect the Greek government to do.”
Greece — with a debt mountain of more than 180 percent of its gross domestic product — owes 3.5 billion euros to the European Central Bank on July 20 but has no money with which to pay. Last week, the country became the first developed nation to miss a repayment to the International Monetary Fund.
If Greece leaves the euro zone, the results could be catastrophic for a country that has already endured the worst economic collapse of any developed nation since the end of World War II. Greece has been in a downward spiral since 2010, and the past 10 days have been the most difficult for the country since its debt crisis began.
“ The cost of a Grexit is quite awful for everyone, but especially for Greece,” said George Pagoulatos, a University of Athens economist. “And now it’s very clear: It’s an agreement or Grexit.”
Griff Witte contributed to this report.
Anthony Faiola is The Post's Berlin bureau chief. Faiola joined the Post in 1994, since then reporting for the paper from six continents and serving as bureau chief in Tokyo, Buenos Aires, New York and London.
Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
Washington Post
July 8 at 8:36 AM
ATHENS — Greece asked European partners Wednesday for a new three-year bailout, pledging to make reforms but leaving blank how far it was willing to go to meet cost-cutting demands as the country flirts with bankruptcy.
In the one-page letter , obtained by The Washington Post, Greece proposed to take steps on key issues such as taxes and pension payouts as early as next week. It also pledged to take unspecified “additional actions” to “strengthen and modernize” its economy.
Greece additionally said it “welcomed an opportunity” to explore steps aimed at making its debt “sustainable and viable over the long term” — a nod to its request for debt relief that has met with resistance from some of its leading creditors, especially Germany.
Athens also noted the urgency of its request — with the country’s banks nearly out of cash — and reiterated its commitment to remain within the euro common currency.
Yet any deal will live or die on the details.
And Greece has so far provided very few, leaving European leaders frustrated and warning that time for compromise is running out — less than a week after Greek voters issued a resounding rejection of the previous bailout proposals by euro partners.
A scheduled conference call by European finance ministers to discuss the Greek crisis, meanwhile, was abruptly canceled, suggesting European officials wanted to see more before taking a serious look.
Greek Prime Minister Alexis Tsipras promised “very specific proposals” by Thursday.
Earlier, he delivered an impassioned call on Wednesday for a new deal to European Parliament. It came after an emergency summit of European leaders called to salvage Greece’s financial rescue broke up acrimoniously late Tuesday.
Greece was ordered to deliver a new plan for securing a fresh bailout by late Thursday. It would need to be quickly assessed by European technocrats and then presented to the region’s leaders at a hastily scheduled summit on Sunday.
“The stark reality is that we only have four days left to find an ultimate agreement,” Donald Tusk, president of the European Council, told European lawmakers on Wednesday.
But Tsipras has managed to keep an aura of confidence that Europe will find a way out of the crisis.
At the European Parliament in Strasbourg, France, Tsipras said sounded alternately defiant and contrite. He conceded that Greece’s woes were in large part the legacy of a series of corrupt Greek governments and a long standing culture of tax evasion.
But he also stressed that years of bailout cash thrown at Greece had actually gone to save “European banks” that had previously owned vast amounts of Greek debt, and said that five and half years of enforced austerity had driven the country into the ground.
Any new deal now, he said, needed to take into account the need for growth policies and “debt sustainability” — a reference to contentious Greek demands for some form of debt forgiveness, a stipulation still opposed by some creditor nations in Europe.
“We will continue with our reforms undertaken, but let us not forget that the Greek people have made a tremendous effort for adjustment,” he said. “This has exhausted the resilience and patience of the Greek people.”
Time, however, was running out for compromise as stress grew on Greek’s buckling banking system.
A senior official at the National Bank of Greece who spoke on the condition of anonymity said he was unsure whether the banks would last through Friday. He said employees have been working until midnight to come up with contingency plans but that there was confusion within the bank over what the government’s next steps might be and how they could affect the financial system.
“Now is the time to save the banks and save the people’s money,” he said. “Then we can talk about politics and what brought us here.”
Central to their ability to survive were the actions taken by the European Central Bank, whose directors were scheduled to hold a conference call on Wednesday. The ECB is unlikely to significantly ramp up its aid to Greek banks, but it will need to assess whether slightly more funds may be required to prevent at least one major bank failure by this weekend.
But it is unlikely to completely pull the plug on financing Greek banks while negotiations continued between Greece and its European creditors.
On Wednesday, ECB Governing Council member Christian Noyer said the institution had stretched its rules “to the maximum” to aid Greece, and warned it would need to cut off funds if talks collapsed.
“In the last six months we maintained the lifeline set up for Greek banks and put enormous sums of money on the table,” Noyer told Europe 1 radio, according to Reuters. “Our rules oblige us to stop immediately at that point when there is no prospect of a political accord on a program, or at the point when the Greek banking system crumbles - which would happen if it enters generalized default on all its debts.”
Analysts remained skeptical that European officials could come to a rapid agreement with the Greek government.
“We cannot rule out a deal on Sunday but strong conditionality and commitment to reforms will be required,” economists from Societe Generale wrote in an analyst note on Wednesday.
They noted that any deal would likely require new austerity measures to be passed by the Greek parliament before fully addressing the issue of debt forgiveness.
“The latter condition will be extremely difficult for the Greek government. As a result, we stick to our scenario of 65 percent chance of Grexit,” the economists wrote, using the shorthand for a Greek exit from the euro currency union.
Late Tuesday, following a day’s worth of talks aimed at finding a way out of months of bitter deadlock, European leaders were scathing in their assessments of Greece’s proposals, calling them inadequate and demanding the Greek government return with a detailed plan by Thursday.
Sunday’s meeting of all 28 European Union members will be the final chance to save Greece from economic oblivion — or the moment the country is ejected from the euro zone.
Standing at E.U. headquarters in Brussels Tuesday, European Commission President Jean-Claude Juncker pounded the lectern as he announced that Europe has detailed plans for Greece’s exit from the euro zone — known as “Grexit” — and for delivering humanitarian aid to Athens.
“I’m strongly against Grexit,” he said. “But I can’t prevent it if the Greek government is not doing what we expect the Greek government to do.”
Greece — with a debt mountain of more than 180 percent of its gross domestic product — owes 3.5 billion euros to the European Central Bank on July 20 but has no money with which to pay. Last week, the country became the first developed nation to miss a repayment to the International Monetary Fund.
If Greece leaves the euro zone, the results could be catastrophic for a country that has already endured the worst economic collapse of any developed nation since the end of World War II. Greece has been in a downward spiral since 2010, and the past 10 days have been the most difficult for the country since its debt crisis began.
“ The cost of a Grexit is quite awful for everyone, but especially for Greece,” said George Pagoulatos, a University of Athens economist. “And now it’s very clear: It’s an agreement or Grexit.”
Griff Witte contributed to this report.
Anthony Faiola is The Post's Berlin bureau chief. Faiola joined the Post in 1994, since then reporting for the paper from six continents and serving as bureau chief in Tokyo, Buenos Aires, New York and London.
Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
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