Monday, 11 May 2015

Syriza’s mysterious deal

Greece’s leftwing Syriza government appears to be working towards a more comprehensive deal than was originally envisaged with its main creditors, the Eurozone and the International Monetary Fund.

A Eurogroup statement on Monday night “welcomed the progress that has been achieved so far,” but offered no clues as to when the deal would be finalised. “The reorganisation and streamlining of working procedures has made an acceleration possible,” it said. 

Eurogroup chairman Jeroen Dijsselbloem said talks were "more efficient, more positive, more constructive". 

Greek government spokesman Gavriil Sakellaridis refused to be drawn out on the details of the agreement ahead of Monday’s Eurogroup meeting, except to say that Greece would pay its IMF instalment of $750mn on time the next day. A payment order was duly issued on Monday. “We are not trying to blackmail, but want an agreement that respects commitments to Europe and to voters,” he said.

The rubric agreed on February 20 with creditors was that Greece would sign a partial agreement by the end of April, which would build confidence towards a final deal in June.

But talks have dragged on past deadline. An omnibus bill of agreed measures the government was to have made public on April 30 has remained under wraps.  The government in Athens now says it is confident of a deal in May, without specifying whether it will be interim or final.

Sakellaridis did not seem to believe that Monday’s Eurogroup would be definitive. “We want this Eurogroup to acknowledge the important progress marked so far in the Brussels Group,” he said, referring to the technical teams of negotiators on the two sides. 

The lack of such acknowledgment had hounded Finance Minister Yanis Varoufakis at the last Eurogroup meeting in Riga, Latvia on April 24. Finance ministers were so critical of Greece’s apparent lack of progress in talks that Varoufakis left without attending a post-conference dinner. “We see that this process… is leading nowhere,” he said afterwards. Varoufakis maintains that Greece had given technical teams a “hot text” full of proposals, but until there was agreement at the technical level, Dijsselbloem refused to distribute the proposals to ministers.

Bad press

The government is also smarting after a official at the Bank of Greece sent an email to journalists blaming Syriza for the loss of tens of billions of euros from the Greek financial system since it came to power on January 25. The bank has said it does not come from the governor's office or the communications office. 

Syriza does not dispute the figures, but suspects that its creditors are using Greek institutions to attack it. 

Speaking in parliament on Friday, Prime Minister Alexis Tsipras said his government would not judge independent officials "on the basis of whether we have the same ideas or not... but we demand that these people remain loyal to their mission and hold the national line." 

In a veiled threat to central banker Yannis Stournaras, he said a committee of inquiry into past policies will not hesitate to refer those responsible for policy errors to a plenary session of parliament. Stournaras served as finance minister from June 2012 to June 2014. 

The Bank of Greece email, published in part on Saturday and in full on Monday, lists a number of capital outflows:

“Capital flight towards foreign bonds or into mattresses comes to 30-35bn euros,” it says. “Twenty to 30 [billion euros] in loss of stock market equity; 10 [billion euros] for repos [short-term loan instruments]; three [billion euros] in credits from the Community Support Framework. We should have received 4 bn and we got just 1; 20 bn is missing from paper money in circulation; it is impossible to calculate the loss in debt held by foreigners. They own about 70bn euros’ worth; loss of value to real estate; 3 billion less in the economy from non-payment of government suppliers; one must add losses to banks from individuals’ freezing of payments, which has increased non-performing loans. Banks now have a problem and may need another round of recapitalisation.”

“We don’t dwell on the numbers, but on the question of whether it was right and ethical for them to be published in this way,” Sakellaridis said on Monday.  

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