“Greece is joining a fairly exclusive club…”

Which ‘club’, exactly, remains to be seen…  If you’ve been having trouble following the twists and turns and lies and misdirection of the on-going Greek financial crisis [Join the club! – Ed] *ahem*  Perhaps some notes on Greece’s Syriza-led Government’s latest reverse-ferret decision to delay Friday’s €300m (£216m) debt repayment to the International Monetary Fund, and bundle all four of its June payments together in one easy €1.5billion payment by 30 June might help.  30 June, according to the BBC report, is the day on which its bailout deal with the EU and IMF runs out.

From the Guardian live-blog [6.09pm]

At 6.31pm, same source,

Although countries are allowed to bundle their IMF repayments together, this is the first time in decades that it’s actually happened.

According to the IMF, Zambia did it in the 1980s, meaning Greece is joining a fairly exclusive club.

Open Europe tweeted

Big G’s live-blog again [6.42pm]

If Greece can’t or won’t pay tomorrow, can we be confident it will repay the IMF at the end of June?

It all depends on whether Athens can reach a deal with its lenders in time. There are 7.2bn euros of bailout funds waiting to be unfrozen, if an agreement is reached before the bailout programme expires at the end of this month.

But talks between prime minister Tsipras and EC president Juncker last night failed to reach a deal; pensions, labour market reforms and VAT rates are all sticking points (as regular readers know well).

Without compromise, the bailout funds won’t be unlocked in time

And,

If the Greek leader is to call for early elections, he will likely do so on Monday.

But elections would necessarily have to be held in early July – thereby missing the deadline to repay the IMF debts at the end of the month.

The Guardian’s Economic Editor Larry Elliott notes

Athens said it would be bundling together four debt payments due to the IMF into one and would settle up on 30 June.

The move is allowed under IMF rules, but the Washington-based Fund was taken by surprise by the decision, which came just hours after its managing director, Christine Lagarde, said she expected Greece to pay the €300m due on 5 June.

Countries are only supposed to bundle up their debts if they face administrative problems from making multiple payments, but Greece’s decision not to pay on time provides an insight into the country’s desperate financial position.

On the internal Syriza discord,

Greece’s request comes on a day when many in the governing Syriza party have railed against the country’s creditors.

As we reported earlier, deputy social security minister, Dimitris Stratoulis said lenders were pushing a “a disgraceful and dishonourable agreement” on the Greek people.

And that was relatively mild. Alexis Mitropoulos, a deputy parliament speaker and senior official within Syriza told Mega TV that Jean-Claude Juncker had presented a “most vulgar, most murderous, toughest plan.” when he met Alexis Tsipras last night.

Helena Smith in Athens for the Guardian

SKAI News on its flagship news programme tonight is reporting that Christine Lagarde was taken aback by the Greek government’s request for consolidation of its debt repayment.

Why? Because Athens had guaranteed only yesterday that the payment would be made in full, reports Helena Smith in Athens.

“Addressing reporters earlier today, Mrs Lagarde said she did not believe Greece would make such a move because she had been told by officials at the finance ministry than Athens would make the loan installment,” the channel’s Washington-based correspondent Katerina Soko said.

More on one of those exclusive clubs…

Greeks are digesting the news that they are only the second country after Zambia to bundle its IMF repayments.

And Greek media reaction

Some Greek media are reporting that Athens could have found the funds owed to the IMF, but chose not to:

And on Greek Prime Minister Alexis Tspiras’ reverse ferret

Just 20 hours ago, Alexis Tsipras was assuring reporters not to worry about Friday’s IMF bill.

We’ve made bigger payments already, he breezily declared, after his talks with Jean-Claude Juncker in Brussels.

This makes the subsequent u-turn all the more surprising, and potentially incendiary.

As Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy, put it to the FT:

“This move is almost unprecedented and based on Tsipras’s comments yesterday unexpected.

It unnecessarily raises the stakes and will further undermine the goodwill of Greece’s creditors.”

Finally, for now, from Helena Smith in Athens for the Guardian

If this is a political move by Tsipras, then it must be designed to pacify his Syriza party.

In particular, the party’s militant faction, which represents around a third of its total MPs and is known as the Left Platform. It says rupture with Europe is now the only option.

Over to Helena Smith in Athens.

The faction wants elections because it believes Syriza would win the polls hand down. Then, one member says:

“We would be in a position to decide what course the country should take.”

Analysts are describing Greece’s plight as “terrifying” – meaning the country’s future is “unforeseeable”.

“The country is in a mess and I don’t know how it is going to get out of it,” the political commentator Alexis Papachelas told SKAI News.

“What is terrifying is that creditors truly believe that what they have offered is very flexible, very tame.”

Clear?  [Other club? – Ed]  Ah, yes…

Or club option 2.  Greece defaults and leaves the euro…

Adds Apparently, the renowned Sinn Féin economic spokesperson MEP, Martina Anderson, has been addressing young members of Syriza in Athens [SF press release 3 June]

…Ms Anderson said; “The current economic crisis across Europe undermines democracy by insisting that the only solution is austerity.

“Earlier this year the people of Greece withdrew consent to be governed by the Troika and the discredited political forces of the old regime. They gave their consent to be governed by Syriza on a clear mandate of ending austerity. But the Troika are showing themselves unwilling to accept that choice.

“We have the alternative agenda. We now need the confidence to constantly define push forward [sic] how we will practically implement the necessary changes.

Our commitment to solidarity does not mean protesting shoulder-to-shoulder [sic agin] with comrades in Greece, Spain, Portugal, France, Britain and elsewhere. It also means we must share the lessons of our struggles. [added emphasis]

Well, let’s hope someone learns something in the time ahead…

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  • Zig70

    If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.

    J. Paul Getty
    If only the Irish had any nuts.

  • Mark Beutler

    If Greece is not going to get any more loans, and will therefore have to default, they would want that default to occur before, not after, making the June 6 payment. The schedule was not working for them. By bundling, they can wait and see if the Troika and Greece will reach an agreement that will permit more loans to Greece. I was expecting this and I am unsure why none of the main players were not.
    I also think that the Tsipras plan is to default and exit. Politically, he wants it to look like a force out. Grexit will be in Greece’s long term interests, but the short term will be ugly, and Tsipras wants to be able to blame someone else.
    Tsipras has a bad hand, but he is playing it well. What I cannot understand is why nobody is planning for the default/Grexit. Not having a plan B (although I think it is really Greece’s plan A) is irresponsible.

  • Zig70

    I’d say having 1.5bl of someone else’s money is a good hand. I don’t think there will be an exit. Modern management techniques are so ingrained in these bureaucrats that they just go for containment each time. The Greeks with any sense will sway periodically and chip a bit of each time. Similar to our current mess on the hill.

  • Adds Apparently, the renowned Sinn Féin economic spokesperson MEP, Martina Anderson, has been addressing young members of Syriza in Athens [SF press release 3 June]

    …Ms Anderson said; “The current economic crisis across Europe undermines democracy by insisting that the only solution is austerity.

    “Earlier this year the people of Greece withdrew consent to be governed by the Troika and the discredited political forces of the old regime. They gave their consent to be governed by Syriza on a clear mandate of ending austerity. But the Troika are showing themselves unwilling to accept that choice.

    “We have the alternative agenda. We now need the confidence to constantly define push forward [sic] how we will practically implement the necessary changes.

    Our commitment to solidarity does not mean protesting shoulder-to-shoulder [sic agin] with comrades in Greece, Spain, Portugal, France, Britain and elsewhere. It also means we must share the lessons of our struggles. [added emphasis]

    Well, let’s hope someone learns something in the time ahead…

  • Thomas Girvan

    Don’t kid yourself, we have loads of nuts!

  • the rich get richer

    Are the Greeks getting ready for Grexit ?

    If I was them I would go for it but I am a “Fook Em” type of header

    Of course that doesn’t mean that I am Wrong

    I might even be right even its through luck ! ! ! ! !

  • kensei

    Iceland has followed hetrodox policy – including default – and is doing better than many who swallowed austerity whole. There’s some debate over the precise state of things, but it is certainly no worse than many other European economies and substantially better than the worst. So what’s the lesson to learn there?

    If Greece exits the Euro and improves it’s position, what’s the lesson then? If they are worse in 2 years but better in 5, what’s the lesson?

    None of this actually hard science, Sheldon.

  • Reader

    I thought Sheldon was your pet name for Turgon or Chrisjones2? Now it’s pete baker.
    Is it a cute meme you have come up with; or a new name for huns; or a disability slur?

  • kensei

    Always Pete, not mine, I simply adopted it as I’m not that original.
    Any other usages are in error.

    Glad we’ve cleared that up. Now the point?

  • Virginia

    She could use the time to learn the basic principals of accounting. Or a less ambitious plan might be to master a wee bit of Excel, focus on formulas which calculate interest and tax payments.

  • smcgiff

    Iceland as an example for Greece. *sigh*

    Do a tiny bit of research.

  • smcgiff

    A+ credit rating, people paying us to take their money. Unemployment consistently down over 3 years. EU leading growth for the years ahead.

    Pity we didn’t go the route of the Greeks. We could sack everybody in the IDA and save many thousands of euro as we wouldn’t need them with all the FDI leaving the country.

    Ireland didn’t get a soft landing but the re-take off seems to be less bumpy than expected.

  • OneNI

    mmm Greece is about to crash No doubt Sf will still praise their lunancy

  • kensei

    Yeah because I pulled that out if my ass. Obviously in many ways there are different cases. But at a high level still a useful case studies for those that insist countries should suck it up and take their medicine, or attempt some moral argument, since they followed radically different policies from the neoliberal consensus.

    Now have you got an actual point or would you like to continue being a smartass?

  • smcgiff

    No actual point, beyond anyone putting Greece and Iceland in the same category is ridiculous.

    Before any further useful discussion is possible research the debt Iceland reneged on. i.e. it wasn’t sovereign.

    Then look at Iceland’s self sufficiency such as its reliance on fossil fuels (or lack thereof).

    It also starts off with its own currency that it can devalue the hell out of.

    Also look at the tax compliance of the Icelanders to see how they can rely on themselves.

  • Robin Keogh

    The simple fact in all of this is Greece cannot hope to repay their debt as it stands. The money just is not there and in the absence of a reasonble deal from their creditors the country will continue to spiral downward. What saddens me most about this is the way many people have managed to desensitise themselves from the sheer level of poverty and panic that is gripping the Greek people. People scavanging for food and hundreds of thousands of children now living in extreme poverty. Whatever Europe is or was supposed to be, I don’t think allowing a member state to fall into absolute deprivation was one of them. Syriza have some task on their hands, they are not the party that drove Greece into this mess, but have the unenviable task of trying to sort it out.

  • kensei

    So Iceland burnt the bond holders rather than allowing that debt to become sovereign? That is certainly an interesting lesson.

    Anyway, I know all that. If the IMF had been called in do you believe they’d have followed the same programme?

  • Sergiogiorgio

    Mark – if Greece exits do you foresee any further exits? I’m particularly worried about Portugal.

  • Reader

    Robin Keogh: What saddens me most about this is the way many people have managed to desensitise themselves from the sheer level of poverty and panic that is gripping the Greek people.
    Have you considered that the Greek Government is not managing that very well? The Greek Government is shroud-waving over highly visible poverty while still protecting client groups and unsustainable benefits.
    Their moral position, and negotiating position, would be a lot better if they had spent the last 5 months fixing what they could internally.

  • Sergiogiorgio

    But that would required them to embrace reality and their populist, anti austerity, socialist dreamscape doesn’t “do” reality

  • Old Mortality

    Sergio
    The bond markets are certainly indicating that Portugal is the next most likely exit candidate but its yield spread against Bunds is only 2.1 compared to 10.9 for Greece.

  • Old Mortality

    Robin
    Have you actually been to Greece? You cab find someone ‘scavanging’ for food in any country if you look hard enough.
    In any event, such privations are self-inflicted. Greece should never have joined the Euro unless it was serious about ending its casual attitude to fiscal matters. That will have to happen if it leaves the euro because it will be unable to borrow externally.

  • Sergiogiorgio

    Thanks Mort – I’m concerned if the Grexit is a preface to a domino effect. You know how fickle the markets are to perception.

  • Robin Keogh

    I think the general feeling in Europe that theio is ulikely to be an exit ‘contagion effect’ in the way it was feared that their might be a default contagion earlier in the crises.

  • Robin Keogh

    Yes but the parties respnsible for the spiralling debt and the dishonest accounting to gain entry to the Eurozone where traditional neo liberal governments, not Syriza and it was all done without ordinary Greeks being aware of what was happenning. The Debt is 180% of GDP, its completly unmanageable and even the research department of the IMF have said as much. The only reasoanble option for greece is either debt writdown or warehousing and the reasons EU governemnets are refusing to give is purely politcal and nothing to do with sound economic policy. Coutries such as Ireland and Spain do not want Syriza to win concessions because of dometic policat threats at home from the left. That’s what lies at the heart of the crises.

  • Robin Keogh

    Much of the reforms in Greece have been enacted by previous governemnts, cutting pansions, pay and pulling cash from local authorities to pay debts. Yes there is a lot to do in terms of their tax regime etc but that is not what is holding up progress.

  • Robin Keogh
  • Old Mortality

    Robin
    Actually PASOK were in office before and after Greece joined the euro. Not neo-liberals unless you’re the sort of leftist cretin who thinks that anyone who doesn’t believe in endless expansion of the state is a neo-liberal.
    I don’t think the Greek people woke up on 1 January 2001 astonished to discover that the drachma had vanished. The dissembling required to enter the Euro was in order to deceive the ECB rather than the Greek people.
    Of course, countries like Ireland and Spain don’t want Syriza to succeed because that would undermine the eurozone completely. And who would want to accommodate a government which, reportedly, is willing to concede a rise in the pension age to 62 over the next decade.

  • Mark Beutler

    I do not know about Portugal specifically. If preservation of the Euro zone is desired, it is in the interest of the members to make exit as painful as possible. I am not necessarily suggesting that they will act on that motivation (not quite that cynical yet). If Greece can exit relatively pain free, the euro zone is over. Others will follow. And I believe it will be far from pain free. The rest of the Euro zone will take the punch and keep going. I also think that the Euro zone is dead if the members cannot enforce discipline and make members act in a fiscally prudent manner. On balance, Grexit is the move that is most likely to preserve the Euro zone.