A bunch of doubtful «solutions»

Posted by economia 12/06/2017 0 Comment(s) Economia Blog,

As the days pass and the June 15 Eurogroup gets closer, an ever-growing bunch of "solutions" to the seeming impasse of the current Greek Adjustment Programme review gets to the fore.

 

First and foremost, the Schaeuble solution which seems to be co-opted now by the IMF (the Fund's Director-General, Christine Lagarde, will be attending the 15/6 Eurogroup in person, signaling that "a solution is possible"). It consists in just taking note of the mountain of fiscal-plus measures and reforms just voted by Greece; in having the IMF politely approving such measures and reforms but stopping short of joining the Greek Programme OR giving any positive pronouncement as to Greek debt sustainability; in leaving the matter of Greek debt relief open until the German elections are over and a new Government is formed in Berlin; plus, in liberating a (promised ) funding tranche so that Greece be able to pay some 7 bn euros falling due until mid-July (more than 4 bn to redeem bonds held by the ECB).

 

Such a "solution" would leave the current Greek Government high and dry.. This is why some "language" may be added to the 15/6 Eurogroup statement, to make things somehow more palatable to Athens. Is this the second "solution"? If not, things might go to the Summit of June 22 as Greek PM Alexis Tsipras has been hinting - getting back strong signals that no different Euro-consensus would be forthcoming at that level.

 

A variant to that would be for the aforementioned "language" of the Eurogroup to be deemed sufficient for the ECB to give Greece access to its Q.E. programme - or, at the very least, to start discussing such access. No positive signals coming of Frankfurt towards such a direction.

 

Since all such scenarios would do little to make Greece's slog toward re-joining the capital markets possible (at come point later in 2017 or at the latest in the first months of 2018), such being the real aim of all discussions over the Greek issue, one further alternative approach  has been attempted. Coming as "the French solution" - or the "LeMaire solution", from the name of the current French Minister of Finance - it would consist of providing Greek debt payments with a ceiling of sorts, depending on the growth rate achieved (or rather, not achieved) by the Greek economy in future. Bruno LeMaire will be in Athens to promote this appoach, already discussed with the Commission, W. Schaeuble, P.-C. Padoan and J. Dijsselbloem. Greek P.M. Tsipras has pre-emptively agreed with such an approach terming it "a growth-based solution", hoping that some sort of E.U. structural funds promise could be added to the Eurogroup statement allowing for positive interpretation.

 

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