Tag Archives: greferendum

Three ways Europe and Greece could blow their last chance at a debt deal

varoufakiseuclidPhoto credit to EPA/BGNES.

The world woke up to the news Monday morning that outspoken Greek finance minister Yanis Varoufakis had, at long lost, been dismissed by his prime minister, Alexis Tsipras.Greece Flag Icon

Varoufakis (pictured above, right, behind Greece’s new finance minister, Euclid Tsakalotos) had become, to say the least, a brake on negotiations with the Eurogroup, even though his widespread popularity and strident anti-austerity boosted Tsipras’s government to a stunning victory in Sunday’s debt negotiations referendum, whereby 61.31% of voters rejected a prior plan offered by Greece’s European creditors.

European officials struggled to reach consensus with Varoufakis, who just last week, in the middle of the rushed referendum campaign, referred to his European ministerial colleagues as ‘terrorists.’ Tsakalotos, an Oxford-trained economist, is expected to take a more mild-mannered approach, and he already supplanted Varoufakis as Greece’s chief negotiator back in April. That was, however, only to the extent anyone could supplant the motorbike-riding, free-wheeling Varoufakis, who gave his final press conference as finance minister Sunday night in a t-shirt.

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RELATED: If Grexit comes,
Greece will have wasted five years in depression

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Varoufakis’s resignation, along with a pledge of national unity across Greece’s mainstream domestic political spectrum, breathed new life into hopes for last-minute talks for a third bailout, allowing the country to reopen its illiquid and perhaps insolvent banks, lift (at least partially) capital controls that have limited daily cash withdrawals to €60, restore liquidity to ATMs that have run out of cash altogether, address Greece’s €1.6 billion default on June 30 to the International Monetary Fund and meet a July 20 deadline to make a €3.5 billion payment to the European Central Bank.

For all the celebration that followed the resounding ‘no’ vote in Sunday’s referendum, the coming Sunday could bring financial austerity far more severe than Greece has known in the past five years, marked by a nearly 30% drop in GDP growth and a 26% unemployment rate. Failure to reach a deal could result in a shortage of cash, food, medicine and so many other necessities to the extent that European leaders are whispering that Greece could require humanitarian aid.

Notwithstanding the dire consequences, a deal is not necessarily likely — or even possible. If they’re lucky, the European Union has five days to prevent Grexit. Here are four reasons why it will be so difficult in the hours ahead.  Continue reading Three ways Europe and Greece could blow their last chance at a debt deal

If Grexit comes, Greece will have wasted five years in depression


Photo credit to Orestis Panagiotou / EPA.

If you think the past nine days have been tense, just wait.Greece Flag Icon

For all the uncertainty and mistrust that have characterized Greek-EU relations since Greek prime minister Alexis Tsipras suddenly announced a snap referendum last Friday, the week ahead promises to reach ever dizzying heights of suspense after Greek voters delivered a strong endorsement to Tsipras by rejecting the terms of the most recent deal on offer from the Eurogroup — over 61% of the electorate voted no (or ‘oxi’). The result, whether Tsipras admits it or not, essentially begins the process by which Greece will eventually leave the eurozone.

There are no winners here.

Tsipras and the far-left SYRIZA (Συνασπισμός Ριζοσπαστικής Αριστεράς, the Coalition of the Radical Left) took power after January’s parliamentary elections on the mutually incompatible pledge of keeping Greece in the eurozone while demanding more lenient conditions from the country’s creditors. In so doing, Tspiras miscalculated European goodwill. It wasn’t unreasonable for Tsipras and finance minister Yanis Varoufakis to argue that Greece’s debt load is unsustainable. Moreover, even plenty of orthodox economists, including many at the International Monetary Fund, one of Greece’s creditors, admit that years of austerity have exacerbated economic conditions — GDP contraction of nearly 30% since 2008, a 26% unemployment rate and a nearly 50% youth unemployment rate. But the erratic and amateurish approach of the Greek government, capped by Tsipras’s 11th-hour decision to call the July 5th referendum, destroyed what little goodwill remained for his government.

There’s still time — even now — for Greece and the rest of Europe to reach a deal. But the complete lack of trust between Tsipras’s government and the entirety of the rest of the eurozone’s leadership makes it much less likely to happen. The complete breakdown in trust between Tsipras and even sympathetic European leaders must certainly rank among the most troubling casualties of the past nine days. Continue reading If Grexit comes, Greece will have wasted five years in depression

IMF report backs up Tsipras in Greek referendum


Did the International Monetary Fund’s latest proposal just basically admit Greek prime minister Alexis Tsipras is right? Greece needs, under still-optimistic growth projections, at least € 50 billion through 2018 and debt restructuring. If Berlin admitted this even a week ago, we’d have avoided a lot of trauma. So while the Greek government is still amateur-hour, Tsipras, finance minister Yanis Varoufakis (picutred above with IMF managing director Christine Lagarde) and the rest are fundamentally correct — Greece can’t meet its debt burden.Greece Flag Icon

All of this should have been easily foreseeable five years ago. The answer is that this deal, like the eurozone’s creation in the 1990s, was more about politics than economics. I don’t know if that means ‘nai’ or ‘oxi’ or what ‘nai’ or ‘oxi’ generally even mean anymore.

Greek referendum — the right step at a dangerously wrong time


For the past 48 hours, the rest of Europe and, indeed, the rest of the world have watched Greece come unhinged. Greece Flag Icon

In a speech shortly after midnight Friday night, prime minister Alexis Tspiras announced that instead of continuing negotiations between the Greek government and the Eurogroup of eurozone finance ministers, he would call off talks to hold a referendum next Sunday, July 5, thereby putting the question to the Greek people — will they accept the terms of the latest deal with Greece’s creditor institutions or will they reject it?

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Never mind that the creditors’ offer could be moot by next Sunday.

Never mind that Greece faces, at best, a technical default on Tuesday.

Never mind that the referendum caught everyone else in Europe off guard, eliminating what little goodwill Greece had left.

Never mind that Greece’s constitution seems to forbid direct referenda on fiscal matters.

Never mind that it seems to be accelerating a financial crisis now mandating extraordinary measures in Athens.
Continue reading Greek referendum — the right step at a dangerously wrong time