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Greece is running out of money. The government in Athens is raiding the budgets of the health service and public utilities to pay salaries and pensions. Without fresh financial support it will struggle to make a debt payment due in July.
No, this is not a piece from the summer of 2015 reprinted by mistake. Greece, after a spell out of the limelight, is back. Another summer of threats, brinkmanship and all-night summits looms.
The problem is a relatively simple one. Greece is bridling at the unrealistic demands of the European commission and the International Monetary Fund to agree to fresh austerity measures when, as the IMF itself accepts, hospitals are running out of syringes and buses don’t run because of a lack of spare parts.
Athens has already pushed through a package of austerity measures worth €5.4bn (£4.23bn) as the price of receiving an €86bn bailout agreed at the culmination of last summer’s protracted crisis and expected the deal to be finalised last October.
Disbursements of the loan have been held up, however, because neither the commission or the IMF believe that Greece will make the promised savings. So they are demanding that Alexis Tsipras’s government legislate for additional “contingency measures” worth €3.6bn to be triggered in the event that Greece fails to meet its fiscal targets.
This is almost inevitable, given that the target is for the country to run a primary budget surplus of 3.5% of gross domestic product by 2018 and in every year thereafter. This means that once Greece’s debt payments are excluded, tax receipts have to exceed public spending by 3.5% of GDP. The exceptionally onerous terms are supposed to whittle away Greece’s debt mountain, currently just shy of 200% of GDP.
If this all sounds like Alice in Wonderland economics, then that’s because it is. Greece is being set budgetary targets that the IMF knows are unrealistic and is being set up to fail. It will then be punished further for being unable to do what was impossible in the first place.
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Predictably enough, the government in Athens is not especially taken with this idea. It has described the idea as outlandish and unconstitutional, but is in a weak position because it desperately needs the bailout loan and threw away its only real bargaining chip last year by making it clear that it would stay in the single currency whatever the price.
So Tsipras is doing what he did last year. He is playing for time, hopeful that by hanging tough and threatening another summer of chaos he can force Europe’s leaders to offer him a better deal - less onerous deficit reduction measures coupled with a decent slug of debt relief. For the time being though, the matter is being handled by the eurozone’s finance ministers, who want their full pound of flesh.
The mood is especially unyielding in Germany, where Angela Merkel’s popularity has suffered as a result of her open door policy toward refugees. Faced with growing hostility, she has concluded that this is not the time to show any signs of weakness. She has sought to mollify German voters by giving her finance minister, Wolfgang Schäuble, a free hand to ratchet up his criticism of the stimulus policies Mario Draghi is pursuing at the European Central Bank, and by insisting that there should be no debt relief for Greece until Tsipras has done everything demanded of him.
Merkel must pray that the lid can be kept on Greece until after 23 June, because it is hard to see how a repeat of last summer’s argy-bargy would help keep Britain inside the EU - rather more important to Germany in the long term than a few billion euros of debt relief.
The reason is that David Cameron can only win his referendum by securing the votes of non-Conservative supporters, for some of whom the handling of Greece exemplifies everything that is wrong with the EU - its lack of democracy, hyper-conservative economic agenda and insistence that the single currency is a great success when in fact it has proved to be a colossal failure.
The french have had widespread Mayday demonstrations which have degenerated into riots - protests aboutnew labour laws whilst unemployment stubbornly remains above 10%
How to save £25 billion p.a.?--Leave and keep uk net £10billion p.a. contributions - and then when Scotland votes to stay in Europe / leave the union - the rest of the UK will save the £15 billion per annum subsidy to the Scots
Stay in Europe- wait for Turkey to come in - and our annual payments can only increase .
The choice is ours.......
Currently are you ' in' or 'out' ?
No, this is not a piece from the summer of 2015 reprinted by mistake. Greece, after a spell out of the limelight, is back. Another summer of threats, brinkmanship and all-night summits looms.
The problem is a relatively simple one. Greece is bridling at the unrealistic demands of the European commission and the International Monetary Fund to agree to fresh austerity measures when, as the IMF itself accepts, hospitals are running out of syringes and buses don’t run because of a lack of spare parts.
Athens has already pushed through a package of austerity measures worth €5.4bn (£4.23bn) as the price of receiving an €86bn bailout agreed at the culmination of last summer’s protracted crisis and expected the deal to be finalised last October.
Disbursements of the loan have been held up, however, because neither the commission or the IMF believe that Greece will make the promised savings. So they are demanding that Alexis Tsipras’s government legislate for additional “contingency measures” worth €3.6bn to be triggered in the event that Greece fails to meet its fiscal targets.
This is almost inevitable, given that the target is for the country to run a primary budget surplus of 3.5% of gross domestic product by 2018 and in every year thereafter. This means that once Greece’s debt payments are excluded, tax receipts have to exceed public spending by 3.5% of GDP. The exceptionally onerous terms are supposed to whittle away Greece’s debt mountain, currently just shy of 200% of GDP.
If this all sounds like Alice in Wonderland economics, then that’s because it is. Greece is being set budgetary targets that the IMF knows are unrealistic and is being set up to fail. It will then be punished further for being unable to do what was impossible in the first place.
Advertisement
Predictably enough, the government in Athens is not especially taken with this idea. It has described the idea as outlandish and unconstitutional, but is in a weak position because it desperately needs the bailout loan and threw away its only real bargaining chip last year by making it clear that it would stay in the single currency whatever the price.
So Tsipras is doing what he did last year. He is playing for time, hopeful that by hanging tough and threatening another summer of chaos he can force Europe’s leaders to offer him a better deal - less onerous deficit reduction measures coupled with a decent slug of debt relief. For the time being though, the matter is being handled by the eurozone’s finance ministers, who want their full pound of flesh.
The mood is especially unyielding in Germany, where Angela Merkel’s popularity has suffered as a result of her open door policy toward refugees. Faced with growing hostility, she has concluded that this is not the time to show any signs of weakness. She has sought to mollify German voters by giving her finance minister, Wolfgang Schäuble, a free hand to ratchet up his criticism of the stimulus policies Mario Draghi is pursuing at the European Central Bank, and by insisting that there should be no debt relief for Greece until Tsipras has done everything demanded of him.
Merkel must pray that the lid can be kept on Greece until after 23 June, because it is hard to see how a repeat of last summer’s argy-bargy would help keep Britain inside the EU - rather more important to Germany in the long term than a few billion euros of debt relief.
The reason is that David Cameron can only win his referendum by securing the votes of non-Conservative supporters, for some of whom the handling of Greece exemplifies everything that is wrong with the EU - its lack of democracy, hyper-conservative economic agenda and insistence that the single currency is a great success when in fact it has proved to be a colossal failure.
The french have had widespread Mayday demonstrations which have degenerated into riots - protests aboutnew labour laws whilst unemployment stubbornly remains above 10%
How to save £25 billion p.a.?--Leave and keep uk net £10billion p.a. contributions - and then when Scotland votes to stay in Europe / leave the union - the rest of the UK will save the £15 billion per annum subsidy to the Scots
Stay in Europe- wait for Turkey to come in - and our annual payments can only increase .
The choice is ours.......
Currently are you ' in' or 'out' ?
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If you are going to cut/paste stuff, you should attribute it, and then distinguish between that and your own comments. It will make life much easier as people can argue with you or the Guardian as appropriate.
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Blackbarn:
why? makes no difference to the content buti am sorry if this posting upset you in any way i'm not 100% - but the more i think about it the more likely am to want out you in or out ? |
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I really cannot see how Greece are ever going to pay this debt? It is gong to have to be written off some time. The alternative is to devalue money, but then we have inflation, which endangers everybody on fixed incomes. It is the Credit crunch which has caused all this, but it is fairly obvious in hindsight the EU was always a very poor economic model. Otherwise it would never have allowed Greece to run up these debts in the first place. We live in uncertain times. |
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They got bills, they're multiplying and their losing control.
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Greece is bridling at the unrealistic demands of the European commission and the International Monetary Fund to agree to fresh austerity measures
They aren't "fresh" measures - they are the ones they agreed to last year and are now trying to renege on. The Greeks have had the solution in their hands for years - leave the euro. |
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There is one way Greece could pay off their debt
Pay them to take all Muslim refugees in the EU, since there is no work in Greece the EU may have foot the benefits bill An idea, we seem to be bribing Turkey already to take them |
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Greece should never been allowed to join as their GDP was not at the required levels laid out in the Copenhagen agreement. Neither was Poland's or any of the other ex communist states, and neither is Turkey's or the Ukraine's. That is why so many have moved to the richer EU countries, and there are millions more who will do the same when they join the club.
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http://cyprus-mail.com/2015/07/12/pensioned-off-at-33-no-wonder-greece-is-bankrupt/
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I spend a fair amount of time in Cyprus and read the article above last year. Cyprus isn't much better.
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Burton-Brewers • May 3, 2016 12:15 PM BST
Greece should never been allowed to join as their GDP was not at the required levels laid out in the Copenhagen agreement. Neither was Poland's or any of the other ex communist states, and neither is Turkey's or the Ukraine's. That is why so many have moved to the richer EU countries, and there are millions more who will do the same when they join the club. You are saying if the EU stuck to the rules we would be ok  ...I did not know thatYou should have run the EU BB...you would have had my vote |
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they don't need me EG but what is the point in making these treaty rules if they are not adhered to? Brussels now just wants a super state at any cost and as swiftly as possible, to those who say we can opt out of the bits we don't like I say nuts. A super state is coming and with it a single tax system, education, judicial, currency, police and armed forces. It might take 10-20 years but it is coming.
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If just half the stuff in that link Tallywagger put up is true, then no wonder Greece is down the toilet.
That's not "bad bankers" causing their country to go down the tubes, it's self-screwed-up. I can't remember the smug bald socialist 'econonmist' from Greece mentioning any of this stuff, .. wasn't he going to be advising Corbyn? |