On the same subject
The Greek government displays a quiet confidence: loud “no” got massive Sunday, he will be able to return to the negotiating table to conclude a new more favorable compromise that will allow it to retain its place in the euro area. Athens should explain its partners today what he wants, since it convened a Eurogroup (the 19 finance ministers, plus the International Monetary Fund and European Central Bank), followed by a summit of heads of State and Government of the euro area. Proof of his good will, Alexis Tsipras, the Greek Prime Minister, held a “Varoufexit” prior by dismissing his Finance Minister, Yanis Varoufakis, who managed to put all back partners.
Scenario 1 The amicable separation
The European authorities had warned that a “no” to the draft compromise negotiated between Greece and its creditors (eurozone and IMF ) mean a single currency output. “There is that France, Italy and the Commission who really want to pick up the thread of the negotiation” , they say to the Commission. Others want to charge Tsipras its gamble, starting with the German government (see page 5) . The majority of the euro area is even less inclined to indulgence that she is afraid of creating a precedent: each country going bankrupt might be tempted to call his people to exonerate common rules or to obtain a total or partial cancellation of its debt. Suffice to say that the victory of the “no” camp has reinforced hard that not only do not believe a word the government says SYRIZA (radical left), but believe a Grexit will affect only a marginally eurozone has increased significantly since 2010. The calm markets for ten days seems to prove them right. Since it was impossible to find any common ground, Athens could accept an amicable separation to limit the damage. This output would be written as “temporary”, the time for the country to reform, which would allow it to ensure its maintenance in the EU (regional aid and the Common Agricultural Policy weigh 4% of Greek GDP), an output Euro up legally in hand with EU output. Especially, Greece would get the support of the ECB, which would enable Greek banks to hold up to the reintroduction of the drachma.
Scenario 2 The agreement
This is the dream scenario which no one dares to believe, after five months of repeated cold showers. But this time, Tsipras will be able to negotiate with the support of a people that wants to stay in the euro and the majority of parties in Parliament that gave it a mandate to negotiate for Greece. Which was unacceptable before the referendum could become acceptable in these conditions, the extreme left of Syriza to recognize the legitimacy of its leader no longer dependent on them … “We have little time to get there because of the deadline of July 20: at that time, it will take that Greece has received money to repay the ECB, which entails the prior approval of several parliaments, “ says one Brussels . If Tsipras put to a referendum on the version of the agreement dated 25 June – not the more favorable of 26 June – maybe this is to create room for maneuver in order to reach agreement Quick. Anyway, assuming that its partners are ready to conclude, they might concede that a few extra crumbs in the allotted time. In reality, it’s debt that Tsipras wants to get something tangible: although loans from the Europeans do not weigh on the Greek budget, since a moratorium until 2023 together with a rate cut was granted in late 2012, is its future repayment explains the requirement of a primary budget surplus (before debt burden) important in the coming years. The Europeans had already planned to make an additional gesture (notably by extending loans from thirty to fifty years) if the agreement was sealed on June 27 But after Sunday’s election, the situation was complicated: any concession will appear as a bonus given to gamble Syriza. The German Ministry of Finance has already said that a Greek debt relief was “not an issue” …
Scenario 3 disorderly exit
“Nobody wants to take political responsibility to put Greece out” , does one note to the Commission, pointing out that “If Tsipras arrives not with a convincing plan, it is likely we will just let things rot “ In short, expect the strangulation of the country. the ECB decided Monday night to maintain his line of emergency liquidity ( ELA) at its current level (over 90 billion), in violation of its internal rules, “there remains that between 500 million and 1 billion euros in Greek coffers” says Wolfango Piccoli, an economist at think tank Teneo Intelligence. Clearly if Frankfurt does not increase this ceiling, banks will no longer supply the ATMs and capital controls will be strengthened. According to a source from the Greek government, daily withdrawals could today from 60 to 20 euros … The ECB will continue until July 20 probably his line ELA, but not after the non-repayment of 3.5 billion that Athens owes. The collapse of the Greek banking system will no longer be a matter of days. The government would have no choice but to issue a parallel currency, the famous IOY (I Owe You), IOUs from the state. But this can only be temporary before simple return to the drachma.
Greece is not provided free of debt it will have to negotiate with creditors if it does not want these, to reimburse, seize all his property abroad (including aircraft and ships) and make impossible its international transactions (purchase of oil requires a payment that may be entered). And this applies as Grexit either amicable or not. No country can exempt itself from its debt unilaterally
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