Some more suspense for Greece

Posted by Antonis D. Papagiannidis 08/05/2017 0 Comment(s) Economia Blog,

Τhe successful conclusion of the difficult 7-months-long second Review of the current Adjustment Programme for Greece, that now has to get the Greek Parliament's approval, then the Eurogroup's own assent, in no way ends the months-long suspense. Why? Because, coming from Wolfgang Schaeuble - the Dark Knight of the Eurogroup - we have had the most optimistic signals for a positive overall conclusion at Eurogroup level, at the same time a fully-fledged "Nein" regarding any tangible Greek debt relief. While the self-same alleviation, relief, restructuring or whatever of Greek debt has been made by Greek PM Alexis Tsipras into a pre-condition for the application of any forward-looking measures (pension cuts+tax hikes for 2019+2020) that will be voted by the Greek Parliament.

 

Which gives rise to an interesting impasse - or else to an interesting case of double-talk: either the two intertwined sets of conditions will lead to a new deadlock; or the two parties - Tsipras and Schaeuble - will tell their respective audiences opposing versions of the same tale. Tsipras: we have had to vote a harsh set of measures, but debt relief has been agreed (and will be implemented in 2018; if it is not, then "no-go" for whatever is to be voted for 2019-20). Schaeuble: the Greeks have accepted and voted measures for up to 2020; no specific agreement exists for after the duration of the current Adjustment Programme (meaning: as far as the German electoral cycle runs) concerning anything with the words "Greek debt" in it.

 

Meanwhile, a further troubling game is being played out in Greece: even if the Government in place runs the whole of its term of office - a rarity in Greek political practice - most of 2019-20 will be after the next elections. Several successive rounds of opinion polls have recently shown the main Opposition party - Nea Dimocratia of Kyriakos Mitsotakis - clearly ahead. In earlier stages of the never-ending political infighting that is the norm in Greece, Mitsotakis has vowed to accept and abide by whatever is agreed by Greece with its creditors (in line with the "continuity principle"). But now, amid rumours that he and his party are asked by the IMF to clearly state this in a binding way, he has been back-tracking.

 

So, further suspense is building up in Greece, just as a measure of détente was supposed to prevail.

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