Euro crisis: You have six days to comply…

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That’s the message to Greece from Germany the EU finance ministers.  Despite initial reports, prompted by the Greeks themselves, what was agreed yesterday between the party leaders there fell short of what was required – by some €300-odd million.  From the Irish Times report

The ministers imposed a six-day deadline on Greek authorities to comply with their wishes and said all three parties in its coalition must pledge to implement the austerity plan and continue to do so after a general election expected in April.

The ultimatum from the ministers, who will meet again next Wednesday to sign off on the €130 billion rescue, came at the end of a day in which Greece’s technocrat prime minister Lucas Papademos finally secured his government’s support for the new reform package.

The escalation of pressure on Greece reflects frustration in Europe at the failure of its leaders to execute policies promised in its unsuccessful first bailout. Ministers had signalled as they arrived in Brussels that they would not be endorsing the new bailout straight away.

The ministers will insist that no new loans are released without evidence that Athens is executing the plan in full.

“No disbursement before implementation. We cannot live with a system where promises are made and repeated and repeated and the implementation measures are from time to time too weak,” said Luxem-bourg’s premier Jean-Claude Juncker, chief of the group of ministers.

[That Jean-Claude Juncker? - Ed]  Indeed.  Whether the Greek parties pay any more attention to this ‘deadline’ than they did previous ones is another matter…

In Athens, tempers continue to fray.  And the leader of the minority partner in the coalition, George Karatzaferis, has dropped a “bombshell”

George Karatzaferis has declared that he cannot vote in favour of the austerity measures that international lenders insist Greece must accept.

Karatzaferis explained that he believes the road being proposed by the troika is ‘not right’.

He also explained that he still supports Lucas’s Papademos interim government, but wants the Greek prime minister to consider a reshuffle.

Karatzaferis’s Laos party controls 16 seats in 300 seat parliament, so Papademos would still have a majority if Laos walked out of the coalition (which does not appear to have happened).

However, his power extends beyond simple parliamentary maths, as the EU has demanded that all parties need to sign the bill before financial aid is released.

The BBC Europe editor, Gavin Hewitt calls it the “most dangerous moment”.

The size of the crowds on the streets will be important. Already some politicians are wavering over whether to support the new measures. The country’s deputy labour minister has resigned.

If any of the three conditions are not met by next Wednesday then Greece is heading for default.

Finance Minister Evangelos Venizelos accepts the country is being humiliated. He said to the Greek people: “The choice we face is one of sacrifice or even greater sacrifice – on a scale that cannot be compared.”

Nothing underlines the humiliation more than the suggestion from France and Germany that Greece set up a separate account dedicated to repaying its debts.

Many will argue that if that happens what is left of Greek sovereignty will have been cast aside.

It is not difficult to have conversations in Greece where people say they never imagined that joining the EU would result in outsiders dictating policies to them.

Mr Venizelos frames the debate as a choice between staying in the euro or leaving. He challenges the conservative leader, Antonis Samaras, to make the choice.

The finance minister says that if you want to stay in the eurozone, then you have to agree to cuts in pensions as demanded by the EU and the IMF.

He, Gavin Hewitt that is, thinks the ‘deadline’ will be met.

The most likely outcome is that Greece will meet the three conditions by next Wednesday not because they believe in the plan but because they fear the chaos of the alternative, default.

Others, however, are not so sure.  [Adds - And not just in the Telegraph.]

[And "the political trilemma"? - Ed]  Ask Frau Bundeskanzlerin.  Or hope that it crops up in the Guardian’s live-blogging updates.

ANYhoo… “These questions—and many others—will be answered in the next episode…

Adds  From a new Irish Times report

Greek prime minister Lucas Papademos told his turbulent coalition government tonight to accept a harsh international bailout deal or condemn the nation to catastrophe.

“We cannot allow Greece to go bankrupt,” he told a cabinet meeting. “Our priority is to do whatever it takes to approve the new economic programme and proceed with the new loan agreement.”

Mr Papademos, the sole technocrat in a coalition of feuding politicians, tried to assert his authority after six cabinet members resigned over EU and IMF demands for yet more pay, pension and job cuts in return for the financial rescue.

“It goes without saying that whoever disagrees and does not vote for the new programme cannot remain in the government,” he said in televised remarks.

Greece faces bankruptcy unless it gets the funds from the IMF and European Union by March 20th when it has to repay €14.5 billion in maturing bonds.

A former central banker, Mr Papademos tried to raise Greeks’ spirits as the nation enters its fifth year of recession, saying economic growth would return in 2013 despite accusations that the austerity is merely driving Greece into a downward spiral.

Any alternative to the rescue would be much worse, he said in opening remarks using the word “catastrophe” four times.

Well, it is serious…

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  • Alias

    “You have six days to comply… [or we shoot ourselves in the head]”

    You would think the ulterior agenda is to get Greece out of the euro, but Germany wants it inside and under its fiscal control.

    To force Greece out is to force a sovereign default and to provoke a collapse of the eurosystem through the realisation of systemic risks – and that is what the EU has been desperately trying to avoid.

  • Framer

    If they are on strike all the time it is little wonder unemployment is rising and GNP is falling. But the Greek public seems not to have noticed while the BBC only report fatuous stories about starving, penniless Greek surgeons.

    The longer the Greeks can keep getting bailouts before the Germans lose patience then the better positioned they will be for the return of the drachma especially as most have moved their money out of Greek banks in anticipation.

  • Pete Baker

    Adds From a new Irish Times report

    Greek prime minister Lucas Papademos told his turbulent coalition government tonight to accept a harsh international bailout deal or condemn the nation to catastrophe.

    “We cannot allow Greece to go bankrupt,” he told a cabinet meeting. “Our priority is to do whatever it takes to approve the new economic programme and proceed with the new loan agreement.”

    Mr Papademos, the sole technocrat in a coalition of feuding politicians, tried to assert his authority after six cabinet members resigned over EU and IMF demands for yet more pay, pension and job cuts in return for the financial rescue.

    “It goes without saying that whoever disagrees and does not vote for the new programme cannot remain in the government,” he said in televised remarks.

    Greece faces bankruptcy unless it gets the funds from the IMF and European Union by March 20th when it has to repay €14.5 billion in maturing bonds.

    A former central banker, Mr Papademos tried to raise Greeks’ spirits as the nation enters its fifth year of recession, saying economic growth would return in 2013 despite accusations that the austerity is merely driving Greece into a downward spiral.

    Any alternative to the rescue would be much worse, he said in opening remarks using the word “catastrophe” four times.

    Well, it is serious…

  • Alias

    Framer, the reason why Greeks are devesting from their economy is the same reason why non-Greeks are not investing in it (impending monetary devaluation), so its a bit unfair to blame those macroeconomic dynamics on Greek workers when they have no control over them.

  • Pete Baker

    Focus, gentlemen.

  • Harry Flashman

    Here’s my prediction, it’s worth the same as anyone else’s, Greece will eventually default, the far right and the Communists will fight it out on the streets. It will be the preliminary to fierce ideologically driven politics reasserting itself throughout western Europe.

    The cosy consensus of the past half century is over, we who lived through the post-War boom in western Europe will look back on it as an amazing gilded age. A time of bread and circuses, when hairdressers from Strabane could take a fortnight’s holiday in Dubai and come back complaining it was boring. Our politicians kept us fat and happy while they got rich, the problem was it was all based on debt.

    Our grandchildren and those grandchildren of the millions of unassimilated immigrants we brought in to do the work we were to proud to do might resent that set-up somewhat.

    Watch Greece, as that country goes, so will go the rest of Europe, as our Chinese bondholders would say, we are about to live in interesting times.

  • Alias

    Papademos is the EU-appointed administrater/liquidater so he is there to serve his appointer’s interests, not the interests of the Greek people. It’s is the EU’s trademark to use members of a nation to betray it, since such agents of influence are assumed to be promoting the interests of the nation they belong to – particularly when they are in its government.

    Open Europe outlined the options for Greece. None of them are pleasant but the least worst option is the one that Mr Papademos is most anxious to avoid.

    As Dan Hannan points out (courtesy of zerohege), the Greek bail-out is nothing of the sort: it is the EU bailing itself out. Only 19% goes on public spending, and what does go there is considerably less than what is currently taken from the Greek budget to go to the EU.

    The Germans want all of the Greek budget to be dedicated to the EU with only the leftovers going to fund public spending. That’s not surprising given that German and France are owed the lion’s share. What is suprising is that Ireland has the biggest per capita exposure to Greek debt of any EU member but, as a minion state, it has no say in the matter even though a Greek default will do the most damage to its economy out of all of them.

  • lover not a fighter

    Until someone actually defaults and exits the euro we wll not know what this particular bogeyman is made of.

    In the poker game eventually the cards must be shown.

    Greece has a long history and is a country in its own right. I doubt it will dis-entegrate because of a poker game.

    If you are daft enough to loan so much money to those that do not have the means to pay then; YOU ARE THE FOOL.

    Unfortunately we have not explained this to the bankers and politicians that led us into this mess. Instead we have let them reward themselves handsomely for their foolishness.

    What does that make us ?.

    But eventually the penny will drop and the politicians and bankers that allowed this mess to occur will at the very least be moved on.