I’ve been saying for months now that Greece ‘will not be allowed’ to leave the single currency, because Merkel and Draghi accept that the chaos would be fatal for the eurozone. I also recently noted that the ‘done-deal after a suitable period of fisticuffs’ I’d predicted was surfacing. It still is: reduced interest rates on extended periods of Greek debt repayment (plus both ECB and sovereign EU member haircuts) are now being openly discussed by officials in Berlin, Brussels, and Paris.
But the assumption of all the players in this soap opera is that there won’t – indeed can’t – be any changes to the script. However, new storylines are coming into play, and at least three of them could yet demonstrate that this is an unravelling nightmare than a wooden TV production.
Alpha, Greece’s largest bank, released a report 48 hours ago suggesting that the Troika is being deliberately negative. My own information is that the IMF is the prime mover in this negativity. In turn, the bank quite rightly points out an uncomfortable truth: worse than imagined Greek economic performance should be triggering a mitigation of the Greek debt repayment terms anyway….based on the original Brussels bailout.
But the IMF doesn’t want to talk about that: it seems suddenly very keen for some reason to depict Greece as a hopeless basket case. I have no problem with that (I agree with them) but persistent leaking about the need for a third Athens bailout is odd behaviour for a Fund allegedly trying to help the Greeks.
As I predicted, the soft Left in Greece (mainly Venizelos) is remaining adamant that it won’t budge on the Troika’s assertions that the proposed savings are a scam, and anyway more are needed than even the ones suggested. The main issue as always is the fear among the Athenian political class that civil servants awarded massive pay cuts will start digging smelly bodies up, but suspicions remain that the Pasok leader has his own agenda for trying to scupper the Samaras/EU deal on mitigation.
Now I’m told that Thanos Katsambas (a Greek very close to the IMF) has blurted out to the Wall Street Journal that in reality the Papademos Government that fell in 2011 had actually met “only 22% of the commitments madee under the troika-supported program”. (Bailout 1).
Further, according to prominent Greek blogger Yaris Varoufakis, ‘Greece has 12 billion euros pending from Brussels (unspent structural funds for the 2007-2012 period), but the European Commission is only channelling 1.44 billion to the EIB for investments in Greece.’
Just to make things even more confused and conspiratorial, the Bankfurt Maulwurf re-established contact with me yesterday morning. His contention seemed at the time farfetched in the extreme: “It is very simple,” he told me, “the sensible elements in the Frankfurt financial community have made it brutally clear to the key people in Brussels, Berlin – and Herr Draghi – that we are not prepared under any circumstances to submit to a banking union run by the ECB, and most definitely not as the price of saving Greece”.
Many Sloggers (especially in Germany) have, from the start of the Maulwurf’s appearance as an irregular Frankfurt mole, opined that the bloke talks a good game, but he is destined to lose. I think they could well be right, but even after last week’s rebuff, BuBa head Lens Weidmann is still blocking any substantively greater German commitment to the ClubMed bailouts; and as we’ve seen, earlier this week the Karlsruhe Court effectively capped any such involvement at €190bn.
So I was intrigued to read this in Varoufakis’s blog earlier today:
‘Regarding the Banking Union, we have a clash of titans brewing. A new Titanomachy is raging, as these lines are written, between German bankers adamant against any serious supervision by the ECB, and the Commission which has issued a splendid paper on what Europe’s banking system should look like within a few years.’
Now as that is almost word for word what the Bankfurt Maulwurf told me, I have to wonder whether there may indeed be substance to what I have long suspected: that the German financial community is out to stop what it sees as the madmen of the ECB – and that it has an enthusiastic helper in the United States.
That would explain the tough IMF line – and is itself explained by the East Mediterranean aims of the Americans reported here many times before. Washington would like very much to drag Greece into its sphere of influence: but for clear historical reasons, most Greeks with any Left leanings at all would find that abhorrent. So if that’s the case, why are the Samaras soft-Left elements trying to scupper a deal that would keep Greece in the euro, and the gravy train still working for pro-Brussels troughers like Venizelos?
You may or may not remember a Slog post from August 30th that suggested (based on Athenian sources) a plot by Venizelos and others to dump Samaras. The key source at that time said:
“A Samaras failure would damage his political position in Greece massively. Those with their noses in the Belgian and German graft trough have everything to gain from retaining a close EU relationship, everything to lose from the development of this [Cyprus/Israel/Greece] thing, and much to gain from Samaras’s failure.”
The source went on to accuse Evangelos Venizelos directly.
So the calculation of the more corrupt Greek pols appears to be that Samaras screws up, and fear of a Greece drifting off towards Israel persuades Berlin-am-Brussels to keep Greece in the eurozone at all costs.
Up until the last few days, that was looking like a smart overall strategy. But the page one assumption of Venizelos and others is that the EU will always prove to be too strong for Bankfurt and the Karlsruhe Court. If the strong men of Frankfurt really are on a mission to rubbish Greece beyond redemption, then the power assumption might prove to be misplaced.
Things will continue to develop. Stay tuned.