Euro crisis: “Hollande is man of the moment, but Europe’s gaze is firmly fixed on Athens”

As the Irish Times’ Arthur Beesley notes

All of this puts Hollande’s push to renegotiate the treaty in the shade. German chancellor Angela Merkel was quick to rebut her new French partner yesterday, but that can be read as the opening gambit. Her staunch ally Nicolas Sarkozy has been deposed. She has no choice but to work with the new tenant. The Merkozy days are over.

In Brussels, the expectation remains that some form of an amendment will be conjured up to bind member states into a more thoroughgoing commitment to economic growth and structural reform.

This is politically messy, but feasible legally by stitching a protocol into the agreement. There is zero appetite, however, for any change to the existing treaty text and the rigorous fiscal commitments enshrined in it.

Or, perhaps, a separate pact..?  That will be under discussion by EU leaders at the 23rd May summit “informal dinner” in Brussels.

Or, to put it another way…

…welcome though François Hollande’s win may be, there is no ignoring one unfortunate fact. It has been built upon a lie. Or rather, if Monsieur Hollande has not been guilty of lies, he has certainly been economical with the actualité.

Austerity can no longer be inevitable!”, he shouted to his jubilant supporters. “In all the capitals … there are people who, thanks to us, are hoping, are looking to us, and want to finish with austerity.” Yes, well, we’d all love to finish with austerity, mon chef. But we’re not finished with it. Not by a long chalk.

Back to the Irish Times’ Arthur Beesley.

Hollande is man of the moment, but Europe’s gaze is firmly fixed on Athens. After a huge setback for the second bailout by the EU-International Monetary Fund, the big question now is whether the scheme can be salvaged at all.

As a result, Greece’s membership of the euro is in doubt again. This question is as knotty as ever, with a fragmented political landscape suggesting a new election may well be in store before any government is formed. [added emphasis]

Europe still insists there can be no wavering from the settled rescue plan for the country, but a clear majority of Greeks voted for parties opposed to the austerity package tied to it. They include a neo-Nazi party, Golden Dawn, which took 7 per cent of the vote and is now poised to enter parliament.

The only two parties to back the EU-IMF programme – the conservative New Democracy and the socialist Pasok movement – saw their support evaporate. They won’t have the numbers to rule on their own, and the credibility of any coalition seeking to execute the troika plan would be in doubt anyway.

And in Limbo Greece, we’re currently at stage 2 of the 4-stage attempt to form a government with a parliamentary majority

If this fourth attempt fails, the president will try to form a caretaker government, whose sole responsibility will be the calling of elections.

If all those fail, Papoulias may appoint the president of one of the country’s top three courts as an interim prime minister to head a caretaker cabinet. It would then prepare for fresh elections, possibly in mid-June. The last time this happened was in October 1989, when supreme court head Yannis Grivas was appointed after elections produced a deadlocked parliament. However, the fresh elections he oversaw failed to produce a stable government and Greece held its third general election in less than a year.

Where, as the Guardian live-blog noted, the temperature is being turned up

After declaring that Greece’s bailout pledges are now void, Alexis Tsipraswent on to call for an international commission to rule on whether Greece’s debt is legal.The Syriza leader also lived up to his left-wing credentials by saying that he wants Greece’s banks to come under state control.

A Syriza official has also been elaborating on Tsipras’s comments. His position is clear — Pasok and New Democracy must renege on the bailout pledges made to Troika in order to form a coalition government.

Greece’s future in the euro is looking more and more precarious. Tsipras is not calling for an exit from the single currency, but the Troika which provided its €130bn will not welcome calls for the terms to be renegotiated.

In the meantime, as the FT reports

Decision-making on further reforms, including finalising a new €11.5bn medium-term austerity package, will be stalled until a new administration is in place.

“Only non-political measures can go ahead,” the official said, admitting that it would be hard to push forward with 77 separate structural reforms due to be completed during June.

The stalemate puts at risk the timetable for disbursement of Greece’s next loan tranche from its second €174bn bailout. Despite a recent transfer of €3.5bn to cover financial emergencies, the country faces being unable to meet pension, salary and debt commitments next month.

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  • sonixpookah

    Hollande un socialiste à la sauce Bilderberg

  • dodrade

    Why do the greeks still want to stay in the euro when it’s killing their economy?

  • Pete Baker


    Dan Hannan suggests one answer to that question

    Whenever I suggest to Greek colleagues that there might be advantages in a default-decouple-devalue strategy, they reply, not in terms of economics, but in terms of Greece’s self-image. They cling to the euro as to a talisman, a symbol of Greece’s European, rather than Levantine, orientation. This was, of course, the reasoning that led to Greek membership in the first place, despite the country having twice the permitted debt-to-GDP level. No one wants to talk about the economic consequences of the euro; for most Greeks, it was never about the economics.

  • Framer

    The Greeks cling to the euro because it is the gift that keeps on giving. Obviously if it was whipped out from underneath them there would be the mother of all economic collapses. As it is going to happen, one way or another best to get the June bailout money first.
    What brand of Trot is that far-left leader asked to form a government? Too smooth to be Militant. He’s no Tommy Sheridan.
    Spain is different despite their wobbly banks.One hopes any difficulties Santander faces won”t read across to us – Gordon Brown was rather too keen to offload our dud building societies on to the Spanish.

  • Alias

    The EU has always been powered by the German/French axis so there will have to be an agreed agenda between Merkozy and Hollande or the German/French axis will become German rule – and then it’s the political beginning of the end of the EU in addition to the current economic beginning of the end.

    Speaking of which, half of Ireland’s tax revenue will soon be dedicated to repayment of loans secured by the state to bail-out French and German bondholders, so that will leave circa 15 billion to provide state services. That will be a quarter of the amount of spending on public services that the Irish were accustomed to, but still several billion short of the amount currently spent by the state to provide minimum health care services.

    If the Irish aren’t rioting likes the Greeks, it’s only because they’re currently ignorant of their dismal reality. Happy days ahead…