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Greece makes the lenders extremely nervous

12 March 2015 / 20:03:08  GRReporter
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Last Monday, Greece's lenders sent a clear and explicit message to the government, writes the Greek newspaper Ta Nea. At a time when the atmosphere in Brussels regarding Athens is more negative than ever, Eurogroup President Jeroen Dijsselbloem had categorically stated before Yanis Varoufakis that if Greece wanted to leave the euro zone it was free to do so as this would not create any problems for the other 18 member states.

According to the publication, the exact words of Dijsselbloem were, "There is no problem if you want to leave the euro." His reaction was provoked by Varoufakis who had said minutes earlier that the Greek government did not want the technical teams of the new old supervisory Troika, recently renamed the Brussels group, to carry out inspections on Greek territory.

At the same time, according to a publication on the online edition euro2day.gr, the lenders still have significant doubts about the actions of Athens. This is particularly true for the finance ministers of euro zone member states, many of whom claim that what was agreed behind closed doors at the last meeting of the Eurogroup on Monday once again was completely different from what the Greek side announced after the talks.

A Minister who is described as "moderate" stated that Yanis Varoufakis was again criticized by his colleagues. They had clearly told him that, eventually, the members of the Brussels group would have to carry out the inspections on the state of the Greek economy in Athens. According to him, Varoufakis had not opposed at the meeting but stated different things during the press conference.

The publication of euro2day.gr states that the lenders continue to meet behind closed doors to discuss the future of negotiations with Athens, about which they are particularly cautious.

Greek Prime Minister Alexis Tsipras will meet with European Commission President Jean-Claude Juncker on Friday but analysts say that his expectations for it should not be great.

Except for Juncker’s personal good will to intervene at the right time to alleviate the tension or to find a compromise when necessary, and when the discussion is out of control, the European Commission has already taken the side of the lenders. Neither will it try to strengthen its role during the negotiations, nor will it overshadow the other two lenders, namely the European Central Bank and the International Monetary Fund. Jean-Claude Juncker’s plan to change the conduct of the monitoring on the implementation of the rescue programmes has been postponed until the summer at the insistence of the hard core of the euro zone.

The lenders have hardened their line against Athens and their "red" lines are the following:

1. The agreement of 20 February remains unchanged for now and it will continue until the monitoring on budget implementation is completed. Some of the European partners of Athens now believe that the budget surplus attained in 2014 has already turned into a deficit.

2. The monitoring will last at least four weeks with full cooperation from the Greek authorities. If it is not secured, it will last longer. Meanwhile, it is possible that an extraordinary meeting of the Eurogroup be held, with the Ministers physically attending it or having a teleconference call, as their next programmed meeting will take place in Latvia after 6 weeks and it will not be of a formal nature.

3. Greece will not receive any funding before the examination of the budget has been completed and before clarifying the measures to be implemented and voting them in parliament.

4. European officials say the reforms proposed by the Greek government are well received by the lenders, but if the budget is exceeded, they will insist on the implementation of emergency measures to fill the fiscal hole.

5. The lenders will not give in to a possible refusal by the Greek government to implement budgetary measures. Sources of euro2day.gr state they are already preparing a plan B that provides for the mode of action in the event that Greece fails to pay its obligations.

6. While the view that the newly elected government in Athens was not aware of the mode of operation of the three institutions and the Eurogroup prevailed at first, now the lenders are adamant that both Yanis Varoufakis and Alexis Tsipras are very well aware of their requirements in order for the monitoring on the implementation of the rescue programme to be closed.

7. If the negotiations proceed well Greece is likely to obtain part of the last tranche. Nevertheless, the government will have to prepare for the second round of negotiations aimed at granting a third loan. As the recent data available to the lenders is from the summer of 2014, it will probably amount to over 30 billion euro. However, the final amount will be determined after the end of the monitoring. It will also determine whether the European Central Bank will release the amounts that have remained in the financial stability fund after the recapitalization of Greek banks or iif t will require them to remain there to meet future liquidity requirements of banks.

8. Capital flight from Greece continues which bothers the lenders and they have expressed their concerns to the Greek cabinet. They have also warned of lack of investor interest in Greece at an international level that will continue until the situation in the country is clear.

9. The lenders do not seem worried about the likelihood of Greece holding early elections if the government is forced to announce such. This scenario is provided in plan B. "What interests us is the payment of obligations to the lenders on time, no matter what happens in Greece," said a European representative. The same message will be addressed to the government in Athens.

10. Some finance ministers in the euro zone continue to talk about the probability of Grexit.

Tags: PoliticsGreeceLendersEuro zoneTalksBailoutAlexis TsiprasYanis Varoufakis
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