In Greece, of late, it’s all about timing — the two biggest questions being the timing of that Troika report on which the next round of the bailout depends and whether or not Greece gets an extension of time to implement the full slate of cuts needed to win the bailout. France now wants Greeks to get the latter, and allegations are made that the former’s being delayed to benefit Barack Obama’s presidential run.
There’s speculation Greek bondholders may have to take a second haircut, some austerian umbrage from the IMF, and prime ministerial austerian duet, a huge budget deficit gap, a judicial strike, a bankrupt city, a new regressive tax, and hints of ex-cabinet member corruption.
Political rhetoric is heating up, with Golden Dawn much in the news [including its new office in New York City], a stunning bit of political amnesia, a Muslim’s charge of racism against Prime Minister Antonis Samaras, another bloody attack on immigrants, more signs of schism with the coalition’s smallest party, and a German “Nein” to a wartime reparations bid.
France pleads for for time for Greece
It’s the French prime minister, and all he is saying is give Greece a chance.
Greece should be allowed more time to meet deficit targets set by international lenders provided the crisis-racked nation is sincere about reforming its economy, French Prime Minister Jean-Marc Ayrault said on Sunday.
In an interview posted on news website Mediapart, Ayrault also said that a planned 120 billion-euro ($155.87 billion) European Union stimulus package was not big enough and that the European Central Bank had yet to play the role of a “real” central bank.
“The answer must not be a Greek exit from the euro zone,” Ayrault was quoted as saying. “We can already offer it more time…On the condition that Greece is sincere in its commitment to reform, especially fiscal reform.”
Will the Troika’s deadly dose be delayed for Obama?
The latest speculation: The Troika’s holding back on a report devastating to Greece until after the November election, so that the potenial market shudders won’t adversely impact Barack Obama’s election chances.
While there are denials, the anonymously sourced stories are another clear indication that Europeans are scared spitless at the thought of a Mitt Romney victory.
From Philip Aldrick of the London Telegraph:
A decision on granting Greece the next round of its bail-out will be delayed until after the US election to avoid the risk of an economic earthquake jeopardising President Barack Obama’s chances of being returned to the White House, European officials have said.
The report by the “troika” of Greece’s foreign lenders, the European Central Bank, European Commission and the International Monetary Fund, was expected during October but will now come after November 6. Its findings will decide whether to release further tranches of rescue funds to Athens.
“The Obama administration doesn’t want anything on a macroeconomic scale that is going to rock the global economy before November 6,” a European Union official said. “As far as European leaders are concerned, they don’t want [Republican candidate Mitt] Romney, so they’re probably willing to do anything to help Obama’s chances.”
More from Luke Baker of Ekathemerini:
“It’s likely the troika report will be pushed back beyond the U.S. election date,” said a Berlin official who spoke on condition of anonymity. Asked if that was a special request from Washington, he replied: “They don’t want any surprises.”
The European Commission’s spokesman on finance said on Friday the troika would take a week-long break from its work in Athens, the second time it has interrupted its mission since it began in late July, adding to expectations of a delay.
“The inspectors are expected to return to Athens in about a week,” spokesman Simon O’Connor told reporters.
“As for a conclusion of the mission, I don’t have any dates to share with you,” he said, adding that it should be some time during October. “We can’t say exactly when.”
And then came the equally anonymous denial, reported by Lefteris Papadimas of Reuters:
Inspectors from the troika of European Union and International Monetary Fund lenders have assured Athens that their report will not be delayed until after U.S. elections in November, a Greek finance ministry official said on Friday.
“We categorically deny it. It has nothing to do with reality,” the official said. “The heads of the troika meeting the finance minister right now also deny it.”
The possibilities, of course, are endless. Presuming there was a real intent to delay for Transatlantic political reasons, someone [say a German conservative?] didn’t like the notion, then made sure the countermessage was sent.
Or perhaps the report wouldn’t have been finished in time and someone decided to add some stimulus to make sure it came out sooner.
Such are the politics of anonymous leaks.
A second haircut for Greek bondholders?
Bondholders got their first trim in the runup to the current bailout, sending Cyprus deep into crisis since Cypriot banks held a lot of Greek bonds. Noew comes word that another haircut may be in the works, a move that would deal yet a second body blow to Cyprus.,
From Valentina Pop of EUobserver:
The troika of international lenders is considering a second debt restructuring for Greece, according to Financial Times Deutschland.
“There is such a discussion,” a senior official told the paper.
The discussion reportedly revolves around writing off Greece’s first bailout of €110bn dating back to 2010, when eurozone states, the European Central Bank and the International Monetary Fund cobbled together a bailout via bilateral loans.
But neither the IMF or the ECB is willing to take any losses, putting the whole burden on eurozone governments, sources told the newspaper.
But then comes the twist, via Capital.gr:
A further haircut on Greece’s sovereign debt is currently not a topic for the German Finance Ministry, spokesman Martin Kotthaus said Friday.
“One must not run after every speculation,” Kotthaus said at a regular government press conference, MNI reported.
Ah, gotta love it.
Yet another anonymous source, this time IMF ire
The anger, we’re told, is because the coalition led by conservative Anotonis Samaras can’t reach an agreement on all those cuts needed to win the next dose of bailout cash.
The International Monetary Fund, of course, has little regard for those who suffer because of their “restructuring.”
A hardening in the stance of the International Monetary Fund and its representative in the troika, Poul Thomsen, appears to have been behind the Greek government’s inability to reach an agreement with its lenders over a package of 11.5 billion euros in cuts and another 2 billion euros in tax hikes.
The troika, which includes the European Central Bank and the European Commission, ended talks with the coalition on Friday and its representatives are due back in Athens by next Tuesday at the latest. Following negotiations with Finance Minister Yannis Stournaras on Friday, about a third of the 13.5 billion euros in measures remained to be agreed between the two sides.
Government sources said that Thomsen had raised objections to the coalition’s proposals throughout the week and had persisted with the need for further cuts to wages and pensions in order to complete the package. Amid tense exchanges between Stournaras and Thomsen, the IMF official is said to have been unmoved by the finance minister’s concerns about the survival of the three-party government should the cuts be deeper than expected.
Sources said the government believes that by either endangering a deal or by getting Greece to agree to measures it will not be able to implement, the IMF hopes that it will be able to highlight in the troika report on the Greek adjustment program the need for a second debt restructuring.
More from Andy Dabilis of Greek Reporter:
Greek officials acknowledged that the officials from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) would likely depart without the final blueprint needed to release a $38.8 billion loan installment, the last in a first series of $152 billion in rescue loans. A second bailout, of $172 billion, is also on hold until Samaras, the New Democracy Conservative leader, can persuade PASOK Socialist leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis to drop their opposition to more salary and pension cuts and the layoff and eventual firing of 35,000 public workers. A three-hour meeting with them on Sept. 20 produced no progress after weeks of wrangling.
The delay could create anxiety that Greece, which has repeatedly broken promises to reform and missed other deadlines, was serious about making the cuts needed to keep the rescue monies coming. An unnamed Greek official said that even if there is no agreement among the coalition partners that the package could still be presented to the Troika in time to get it to the Parliament the government controls for a rubber-stamp approval before an Oct. 8 meeting of Eurozone officials.
A non-anonymous IMF source says no delay support
Its not they oppose to delay; just that they can’t afford it.
And should a delay be granted, it’ll be up to the eurobank to carry the freight.
From Agence France-Presse:
The European Union must carry the full cost of any easing of the debt-rescue programme for Greece because the IMF has run out of resources for this, IMF representative Thanos Catsambas said on Friday.
Greece, which is deep in tough negotiations with its EU-IMF creditors over conditions for obtaining the next slice of rescue help, is seeking an easing of the timetable for achieving key reform targets by up to two years.
Catsambas said in an interview with Kathimerini newspaper that if a delay were agreed, the European Union should carry the whole cost.
He said that the extra costs to creditors of a delay could be financed by “additional” funds or by “a restructuring of the debt held by the official sector,” meaning the European Central Bank.
Save the eurozone, say Monti and Samaras
Hardly unexpected, given that both countries are dependent on money from the North and Samaras is presently in negotiations with the Troika and Intalian Prime Minister Mario Monti was installed by the Troika to implement his own austerian regime.
Monti’s basically assumed the role of the Troika’s cheerleader amongst the PIIGS, peaching the austerian gospel and making promises of good things to come with the proper discipline.
It’s a message increasingly harder to sell as the crisis deepens and broadens.
From Dow Jones via Greek Reporter:
Italian Prime Minister Mario Monti and Greek Prime Minister Antonis Samaras met on Sept. 21 and agreed that it was “absolute necessity to safeguard the integrity of the euro area,” the Italian government said, referring to the troubled Eurozone of the 17 countries using the euro as a currency.
The Greek financial crisis is threatening the integrity of the financial bloc but Monti, a technocrat who is trying to salvage his country’s economy too, Samaras’s efforts to make more deep pay cuts, tax hikes and slashed pensions and “encouraged the Greek government to continue in the same direction – consolidating public finances and enacting all the necessary reforms,” the note said.
Greek budget deficit double previous estimates
And it amounts to about two-thirds of the hoped-for bailout payment, which it also threatens, since the Troika demands a deficit-free budget.
The only certain outcome is more suffering for the Greek people, especially those most in need for help from government institutions now being demolished.
From Andy Dabilis of Greek Reporter:
Greece faces a budget shortfall of about 20 billion euros ($26 billion) to satisfy international conditions for emergency aid, almost double Continue reading