Sun­day’s ‘No’ vote will not stop the coun­try’s de­scent into chaos

Financial Mirror (Cyprus) - - FRONT PAGE - By Costis Stam­bo­lis

As thou­sands of young Greeks were cel­e­brat­ing last Sun­day in all-night ju­bi­la­tions and street danc­ing the coun­try’s re­sound­ing rejection of cred­i­tors’ bailout de­mands, in a na­tion­wide ref­er­en­dum, where the “No” vote at­tracted more than 61% of votes cast, eco­nomic con­di­tions con­tin­ued to de­te­ri­o­rate. With the banks closed since June 29, and likely to re­main shut for the fore­see­able fu­ture, cap­i­tal con­trols in place, thou­sands of tourist can­cel­la­tions and the mar­ket idled due to lack of cash. A sit­u­a­tion which will pro­gres­sively get worse as bank liq­uid­ity goes to zero and ATMs will not even dis­pense the al­lo­cated sum of 60 eu­ros per day per per­son.

The heav­ier than ex­pected vic­tory for the “No” cam­paign against the aus­ter­ity poli­cies de­mand by Greece’s cred­i­tors - EU, ECB and IMF - has strength­ened the Prime Min­is­ter’s do­mes­tic stand­ing as he cam­paigned ve­he­mently for Greeks to re­ject lenders’ terms. Em­bold­ened by this phe­nom­e­nal ref­er­en­dum suc­cess, PM Alexis Tsipras said he would re­turn to the ne­go­ti­at­ing ta­ble to strike an agree­ment with the cred­i­tors, although most gov­ern­ments in the eu­ro­zone have said they would not of­fer bet­ter con­di­tions to Athens. More im­por­tant, the ref­er­en­dum’s re­sult has cre­ated even more un­cer­tainty about the fu­ture of the coun­try’s bank­ing sec­tor as the ECB has re­fused to ex­tend more ELA sup­port.

Fol­low­ing the ref­er­en­dum, the EC is­sued a brief state­ment say­ing it “re­spects” the re­sult of the ref­er­en­dum. Other re­ac­tions were less diplo­matic.

“With the rejection of the rules of the eu­ro­zone ne­go­ti­a­tions about a pro­gramme worth bil­lions are barely con­ceiv­able” said Ger­man Econ­omy Min­is­ter Sig­mar Gabriel.

“Tsipras and his gov­ern­ment are lead­ing the Greek peo­ple on a path of bit­ter aban­don­ment and hope­less­ness”, Gabriel said, adding Tsipras had “torn down the last bridges on which Greece and Europe could have moved to­ward a com­pro­mise”. Euro­pean Par­lia­ment Pres­i­dent Martin Schulz said Tues­day’s eu­ro­zone sum­mit should dis­cuss a “hu­man­i­tar­ian aid pro­gramme for Greece” af­ter Greeks re­jected cred­i­tors’ pro­pos­als. He added that Greece must make “mean­ing­ful and con­struc­tive pro­pos­als” in the com­ing hours. “If not we are en­ter­ing a very dif­fi­cult and even dra­matic time”, he said.

How­ever, Mr. Tsipras may soon find it dif­fi­cult to de­liver on his prom­ise to se­cure more le­nient bailout terms let alone debt re­lief which has been a cen­tral point in his “No” cam­paign. Euro­pean lead­ers, in­clud­ing Ger­many’s An­gela Merkel and France’s Fran­cois Hol­land, are in no mood to en­ter­tain plans for debt for­give­ness as such a move would cre­ate a bad prece­dent for other Eu­ro­zone mem­bers with sim­i­lar prob­lems such as Italy, Spain and Por­tu­gal, who then make even more press­ing de­mands. As was ex­pected, the suc­cess of the “No” vote led to some fast un­fold­ing po­lit­i­cal de­vel­op­ments. The fail­ure of the “Yes” cam­paign led New Democ­racy leader An­to­nis Sa­ma­ras to an­nounce his res­ig­na­tion. “I un­der­stand that our great party needs a new start”, he said. Sa­ma­ras called on Greeks to set aside their dif­fer­ences and urged the gov­ern­ment to reach a swift deal with cred­i­tors.

In a dra­matic move, con­tro­ver­sial Fi­nance Min­is­ter Yanis Varoufakis was ousted by Prime Min­is­ter Tsipras who re­placed him with Ox­ford ed­u­cated economist Eu­clides Tsakalo­tos who un­til now has headed Greece’s bailout ne­go­ti­a­tion team. The move is ex­pected to ap­pease cred­i­tors who sought a more con­ge­nial and mod­er­ate ne­go­tia­tor.

The re­turn of Tsipras to the ne­go­ti­at­ing ta­ble – which he left on his own vo­li­tion abruptly on June 24, falsely claim­ing that his gov­ern­ment was be­ing blackmailed in or­der to call the “Yes” – “No” ref­er­en­dum - is not go­ing to be wel­comed by most other EU lead­ers and cer­tainly not by EC pres­i­dent Jean-Claude Juncker who was openly cheated by Tsipras’ grand stand­ing. Trust has been se­ri­ously eroded be­tween Greece and cred­i­tors as Euro­pean of­fi­cials re­main un­con­vinced that Tsipras will be able to make good on his prom­ises, let alone de­liver the spend­ing cuts that will have to be agreed in any bailout set­tle­ment. The Euro­pean Union has never wit­nessed any­thing like this hap­pen­ing in Greece be­fore. As over the last ten days the gov­ern­ment has in­tro­duced cap­i­tal con­trols, closed the banks in­def­i­nitely, shut the Athens Ex­change, de­faulted on EUR 1.6 bil­lion IMF pay­ment, en­gi­neered the col­lapse of a multi-bil­lion euro bailout, and or­gan­ised an ill-con­ceived and mis­lead­ing ref­er­en­dum aimed to broaden the gap be­tween Greece and Europe.

Although Tsipras moved quickly to take ad­van­tage of his huge suc­cess with the “No” vote, reshuf­fling his cab­i­net by ap­point­ing the prag­matic Tsakalo­tos for Fi­nance Min­is­ter and per­suad­ing the pro-Euro­pean po­lit­i­cal par­ties to join him in form­ing a united stance in pre­sent­ing his coun­try’s fresh bailout pro­pos­als, he is still go­ing to get a frosty re­cep­tion in Brus­sels. Mean­while, the coun­try is fast mov­ing to­wards fi­nan­cial col­lapse with the gov­ern­ment and banks run­ning out of money. Should the ne­go­ti­a­tions drag on for days, mar­ket in­sol­vency will only get worse with bank­rupt­cies mount­ing with su­per­mar­ket shelves emp­ty­ing and with the ju­bi­lant mood from last Sun­day’s elec­tion quickly turn­ing sour. Ex­ec­u­tives from all dif­fer­ent busi­ness sec­tors are mak­ing daily ap­pear­ances on tele­vi­sion for a so­lu­tion to be found by the week­end oth­er­wise mas­sive lay­offs of work­ers will fol­low and com­plete mar­ket dis­in­te­gra­tion will re­sult.

In a last-minute ef­fort to safe­guard the Eu­ro­zone’s frag­ile unity and pre­vent Greece from go­ing bust, EU lead­ers met once again in Brus­sels on Tues­day night in a hastily con­vened sum­mit. Athens was to be given one more chance to ta­ble its pro­pos­als for a new com­pre­hen­sive plan to cover much needed re­forms, ur­gent fi­nanc­ing re­quire­ments to pre­vent a com­plete melt­down of the bank­ing sec­tor and some kind of debt re­lief. How­ever, se­nior Eu­ro­zone of­fi­cials who have seen the draft pro­posal ap­pear ap­pre­hen­sive not­ing that the new plan is of­fer­ing “too lit­tle, too late” as it fails to ad­dress ad­e­quately the burn­ing is­sue of vi­tal re­forms in the di­rec­tion of cost cut­ting and min­imis­ing Greece’s ex­ces­sive public sec­tor spend­ing. The EU sum­mit takes place against the back­drop of the ECB’s Mon­day de­ci­sion to tighten fur­ther the screw on Greek banks when it re­quired them to of­fer more as­sets in ex­change for ELA, thus squeez­ing fur­ther their liq­uid­ity.

Un­der the cir­cum­stances, it there­fore ap­pears most un­likely that Alexis Tsipras, Greece’s bois­ter­ous Prime Min­is­ter, will walk out of the sum­mit with a firm deal in his hands. He will prob­a­bly be given few more days to ne­go­ti­ate a tran­si­tion pe­riod for the in­tro­duc­tion of a par­al­lel cur­rency in or­der to meet press­ing fi­nan­cial com­mit­ments at home as there is no way for the ECB to ex­tend fur­ther credit.

Mean­while, the econ­omy will con­tinue its down­ward spi­ral as the gov­ern­ment is con­tem­plat­ing the coun­try’s fate­ful plunge into the un­known and its even­tual de­par­ture from the Euro­pean Union. For as we have al­ready pointed out, the ul­ti­mate goal of the rad­i­cal left SYRIZA party, which leads Greece’s coali­tion gov­ern­ment, is to move Greece away from Europe and the Western flank and pur­sue a third-world coun­try type in­de­pen­dent path.

Con­se­quently, Greece will soon be­come a poor and dev­as­tated coun­try in the fringe of Europe and to­tally sus­cep­ti­ble to geopo­lit­i­cal black­mail. The ques­tion is if the pow­ers that be in Europe would re­ally like such an out­come.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.