Playing with time?

Posted by Antonis D. Papagiannidis 02/01/2017 0 Comment(s) Economia Blog,

As 2017 dawns in Greece, the well-known game of playing with time looks set to get started once more. A stressful 2016 ended with Greek Finance Minister Euclid Tsakalotos renewing in a much-criticised letter to the ESM/Eurogroup his country's oath of allegiance to the Adjustment Programme in place (and to the primary surplus goals to be achieved, with a guillotine-like mechanism to come into play were such goals to be missed). 


The new year begins not so much with further New Year's resolutions for Greece but with a re-start of negotiations over the second review of the Adjustment Programme that looks entangled in a Gordian Knot of sorts: Greece's creditors insist on tough structural reforms along with extreme goals for primary surpluses of 3,5% of GDP (with no abatement in sight); the IMF disputes the feasibility of such goals and asks for credible debt relief along with even tougher structural measures; European creditors - mainly electoral-year Germans  - consider such a proposal of debt relief unfeasible; the Greek Government tries to negotiate a passage through such shoals without running the ship aground; the Opposition relishes on this fraught situation but realises that were it have to run the ship, the voyage ahead would be very much the same.


Faced with this political reality, the parties look set to start setting time-lines that will probably be missed one after another: January 12 is the date for the EuroWorking Group to have reached a positive opinion on the current Programme review, in time of the January 26 Eurogroup. In case these dates are missed, payments of some 1.5 billion euros to the IMF and the ESM have to be made by Greece in the next 3 months; by making the pips squeak, this is feasible without a further aid tranche being liberated. But inconclusive negotiations would mean that Greece would miss its rendez-vous with the ECB Q.E. in March. 


The real time-line , though, runs till the end of July when more than 6.3 billion euros are due - to the ECB, the IMF and some remaining private creditors; such sums cannot be mustered by Greece, so if the current review is not concluded we are once more in an impasse. Thus, all parties tend to use time in the negotiations as a tool, or as a weapon or as a shield: this is risky business for all, but were things to really reach the impasse, the immediate price will be paid by Greece. 


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