Doing Bloody Well (23/06/15)
The Sunday Times puts its finger on the nonsense that underpins the ongoing saga of Greek's finances:
'Why should the rest of Europe subsidise the lifestyle of people in Greece who are still doing bloody well?', to paraphrase the words of the Jean-Claude Juncker, European Commission president.
Why indeed, as I've said myself on the blog site recently.
Because how can it make sense for the Syria-led Greek government to abolish taxes on second and third homes in Greece only to demand, often in petulant fashion, for their European neighbours to rescue the Greek economy?
Berlin’s final warning to Greeks
By Bojan Pancevski and Tim Shipman - The Sunday Times
Greek protesters march against austerity measures demanded by the EU (Panayiotis Tzamaros/Demotix)
GERMAN officials have issued a dramatic warning to the Greeks, telling them they will have to leave the eurozone if they fail to do a deal with their creditors.
It followed an equally blunt warning to Athens by Donald Tusk, the president of the European Council, that “the game of chicken needs to end and so does the blame game”.
Leaders of the eurozone countries are due to meet in Brussels tomorrow evening in a final attempt to persuade Alexis Tsipras, Greece’s far-left prime minister, to implement reforms demanded by his country’s creditors.
If no deal is reached by June 30, when Greece’s international bailout ends, the country will run out of money and find itself unable to pay its debts or finance the running of the state.
“The deadline is clear and this is not a moving target,” warned a source close to Chancellor Angela Merkel. “If he refuses to accept a deal, Tsipras will take his nation into a very bad direction.
“It appears that the Greek government was betting that Germany and other eurozone partners would not remain firm in the face of the programme unravelling. But this was a mistake.”
Failure to agree a deal could trigger a default, capital controls and a return to a national currency — perhaps a new drachma — that could be expected to fall sharply against the euro, sending the price of medicine, fuel and other imported goods soaring.
Greece yesterday said it would put new proposals to creditors ahead of the meeting. Alekos Flambouraris, a minister of state, said he did not believe the European Central Bank would allow Greek banks to collapse.
Tsipras is due to take part in a conference call with Merkel and Jean-Claude Juncker, the European Commission president, to try to hammer out a rescue deal ahead of the summit, which will be preceded by a meeting of eurozone finance ministers.
The German government, however, is understood to be sceptical about a possible deal tomorrow. The key points of dispute are debt relief, which is demanded by Greece and rejected by creditors, and further pension cuts, which Greece’s creditors want but which its government is refusing to concede.
“The Greek government knows its pension system is unsustainable and needs to do something about it,” said the German source. “This is not a matter of a couple of billion more or less; it is a matter of having a principled agreement by all sides.” Merkel and her aides were “calm” but “aware of the gravity of the situation”, he added.
The negotiations have gained urgency amid mounting fears Greek banks may tumble into insolvency and could be forced to close their doors. It is estimated that last week alone, €3bn (£2.1bn) was withdrawn by depositors. More than €30bn was taken out in the five months to the end of April.
A Greek exit would have implications that would extend far beyond Greece. Here, ministers have ordered airlines and tour operators to draw up rescue plans to fly holidaymakers home from Greece amid fears that a Greek exit from the euro could leave thousands stranded without money. Treasury and Foreign Office officials have also moved to beef up a scheme that lends small amounts to Britons abroad if Greek banks fail to open tomorrow and cashpoints are closed down to prevent a run on the banks.
Treasury officials say the exposure of British businesses and banks to a Greek financial collapse is minimal, and contingency plan are focused on the risk of “contagion” and the impact on broader economic confidence.
Juncker said he could no longer understand the actions of his “friend” Tsipras and that the Greek prime minister did not “reciprocate” the trust that had been put in him. “There are people in Greece who . . . are still doing bloody well,” he added. “I have therefore asked Mr Tsipras to tax wealth more, but his response to my suggestion did not have the resonance I expected.”
His concerns were echoed by Tusk, who said the Greek government was near the point where it would “have to choose between accepting what I believe is a good offer of continued support or to head towards default”.
“This not a game and there is no time for any games. It is reality with real possible consequences, first and foremost for the Greek people,” he said.
While some members of Tsipras’s Syriza party are not averse to quitting the euro, opinion polls suggest most Greeks want to remain in the currency bloc. Thousands of Athenians are expected to attend a rally tomorrow calling for Greece to stay in the single currency.
Tsipras, who returned apparently empty-handed yesterday from a meeting with President Vladimir Putin in St Petersburg, was due to talk to his advisers. Greek businesses have also called on him to solve the crisis. Andreas Andreadis, head of the Greek tourism association, said a “Grexit” would be “devastating” for the country.
GERMAN officials have issued a dramatic warning to the Greeks, telling them they will have to leave the eurozone if they fail to do a deal with their creditors.
It followed an equally blunt warning to Athens by Donald Tusk, the president of the European Council, that “the game of chicken needs to end and so does the blame game”.
Leaders of the eurozone countries are due to meet in Brussels tomorrow evening in a final attempt to persuade Alexis Tsipras, Greece’s far-left prime minister, to implement reforms demanded by his country’s creditors.
If no deal is reached by June 30, when Greece’s international bailout ends, the country will run out of money and find itself unable to pay its debts or finance the running of the state.
“The deadline is clear and this is not a moving target,” warned a source close to Chancellor Angela Merkel. “If he refuses to accept a deal, Tsipras will take his nation into a very bad direction.
“It appears that the Greek government was betting that Germany and other eurozone partners would not remain firm in the face of the programme unravelling. But this was a mistake.”
Failure to agree a deal could trigger a default, capital controls and a return to a national currency — perhaps a new drachma — that could be expected to fall sharply against the euro, sending the price of medicine, fuel and other imported goods soaring.
Greece yesterday said it would put new proposals to creditors ahead of the meeting. Alekos Flambouraris, a minister of state, said he did not believe the European Central Bank would allow Greek banks to collapse.
Tsipras is due to take part in a conference call with Merkel and Jean-Claude Juncker, the European Commission president, to try to hammer out a rescue deal ahead of the summit, which will be preceded by a meeting of eurozone finance ministers.
The German government, however, is understood to be sceptical about a possible deal tomorrow. The key points of dispute are debt relief, which is demanded by Greece and rejected by creditors, and further pension cuts, which Greece’s creditors want but which its government is refusing to concede.
“The Greek government knows its pension system is unsustainable and needs to do something about it,” said the German source. “This is not a matter of a couple of billion more or less; it is a matter of having a principled agreement by all sides.” Merkel and her aides were “calm” but “aware of the gravity of the situation”, he added.
The negotiations have gained urgency amid mounting fears Greek banks may tumble into insolvency and could be forced to close their doors. It is estimated that last week alone, €3bn (£2.1bn) was withdrawn by depositors. More than €30bn was taken out in the five months to the end of April.
A Greek exit would have implications that would extend far beyond Greece. Here, ministers have ordered airlines and tour operators to draw up rescue plans to fly holidaymakers home from Greece amid fears that a Greek exit from the euro could leave thousands stranded without money. Treasury and Foreign Office officials have also moved to beef up a scheme that lends small amounts to Britons abroad if Greek banks fail to open tomorrow and cashpoints are closed down to prevent a run on the banks.
Treasury officials say the exposure of British businesses and banks to a Greek financial collapse is minimal, and contingency plan are focused on the risk of “contagion” and the impact on broader economic confidence.
Juncker said he could no longer understand the actions of his “friend” Tsipras and that the Greek prime minister did not “reciprocate” the trust that had been put in him. “There are people in Greece who . . . are still doing bloody well,” he added. “I have therefore asked Mr Tsipras to tax wealth more, but his response to my suggestion did not have the resonance I expected.”
His concerns were echoed by Tusk, who said the Greek government was near the point where it would “have to choose between accepting what I believe is a good offer of continued support or to head towards default”.
“This not a game and there is no time for any games. It is reality with real possible consequences, first and foremost for the Greek people,” he said.
While some members of Tsipras’s Syriza party are not averse to quitting the euro, opinion polls suggest most Greeks want to remain in the currency bloc. Thousands of Athenians are expected to attend a rally tomorrow calling for Greece to stay in the single currency.
Tsipras, who returned apparently empty-handed yesterday from a meeting with President Vladimir Putin in St Petersburg, was due to talk to his advisers. Greek businesses have also called on him to solve the crisis. Andreas Andreadis, head of the Greek tourism association, said a “Grexit” would be “devastating” for the country.
