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Greek Bailout: Banks To Re-open ‘Gradually’ On Monday

greece bankGreece’s finance ministry has stated that banks will re-open on Monday after being closed three weeks ago, when capital controls were imposed. The decision comes ahead of a Bundestag vote to open negotations.

Greece’s Ministry of Finance said on Thursday that banks are set to re-open across the country by Monday.

The announcement follows three weeks of capital controls, which forced banks to close and implemented a withdrawal limit of 60 euros ($65.26) per day. The ministry said restrictions, including withdrawal limits, would be “gradually” lifted.

According to the finance ministry, the extension of capital controls was necessary “to protect the Greek financial system and economy because of lack of liquidity.”

On Thursday, head of the European Central Bank (ECB) Mario Draghi said the bank would increase Emergency Liquidity Assistance (ELA) to Greece by 900 million euros ($978.67 million).

Greece’s stock market has remained closed since capital controls were announced on June 28, a week before a snap referendum on a proposal put forth by the country’s creditors.

Streamlining VAT system

The finance ministry also noted that it would begin implementing changes to value added tax (VAT) from Monday.

VAT system reforms were one of the key subjects of debate during negotiations between Greece and its creditors, which Prime Minister Alexis Tsipras initially rejected under the mantle of anti-austerity.

However, Tsipras promised “the streamlining of the VAT system” in an agreement on Monday signed with European partners in order to begin new negotiations on a third bailout programme.

“We will go ahead with the necessary actions so that the implementation of the new provisions can begin fromMonday July 20,” the ministry statement noted.

‘Grexit’ still on the horizon?

Meanwhile, ahead of a parliamentary vote on Friday, German Finance Minister Wolfgang Schäuble questioned the likelihood of a third bailout for debt-stricken Greece.

“We will now see in the negotiations whether there is even a way to get to a new programme taking into account [Greece’s] financing needs, which have risen incredibly,” Schäuble told Deutschlandfunk radio.

Schäuble’s statements come as a break from Chancellor Angela Merkel, who has cautiously pushed for a mandate from the Bundestag to initiate negotiations on a third bailout programme.

After meeting politicians from Germany’s Social Democrat Party (SPD) in Berlin, Eurogroup Chief Jeroen Dijsselbloem said there needed to be an end to talks of Greece’s exit from the Eurozone.

“I would certainly be very happy if the talk about Grexit could stop and we could talk about getting Greece back on track and that’s what we aim to do with this programme,” said Dijsselbloem, who is also the Dutch Finance Minister.

‘Grexit’ could be the best way forward – German Finance Minister Schäuble

Germany’s finance minister told national radio that while an important hurdle has been cleared, a “Grexit” may still be the most logical step. Schäuble said that debt relief and eurozone membership were “incompatible.”

In an interview with Germany’s Deutschlandfunk radio on Thursday, German Finance Minister Wolfgang Schäuble maintained his attitude that a change in government in Athens should not alter European agreements, and that a Greek exit from the Eurozone might be the best for everyone if Athens cannot reduce its debt.

Speaking ahead of a conference call with his 18 other Eurozone colleagues to discuss the Greek crisis, Schäuble said, last night’s parliamentary approval of the reform package in Athens was “an important step,” though he reminded his interviewer that these terms were the “opposite” of what a “large majority” of Greeks had voted for in a referendum.

When asked if he thought the government of Prime Minister Alexis Tsipras could make good on its reform promises, Schäuble responded pragmatically, saying “Greece has obligated itself to do so.” He added the caveat, however, that previous Greek governments had left similar pledges unfulfilled, and “Syriza used this [fact] to come to power.”

Grexit could be the ‘best way’

Schäuble was similarly straightforward about his earlier position that Greece should perhaps leave the Eurozone, at least temporarily, saying “many international economists…also within the IMF and Greece itself…believe Greece can only overcome its debt if some of it is forgiven.” However, he also said that Athens taking a haircut on its debt was “incompatible with membership” in the Eurozone.

“If you think the best way for Greece” is debt relief, Schäuble explained, then “the best way forward” is to leave the euro. He added that it remains to be seen “if a way even exists to overcome the dramatically increased financial needs” of Greece while keeping it in the eurozone.

When the interviewer alluded to perceived differences of opinion on strategy between him and Chancellor Angela Merkel, Schäuble eschewed a detailed answer: “no one is right and no one is wrong…that’s democracy.” He did, on the other hand, praise her handling of an “extremely difficult” situation and maintain that he is a “loyal” member of the government.

He remained emphatic that he would not campaign for or against approval of the bailout package in the Bundestag, the German parliament, which will debate the plan on Friday.

Asked about the differences of opinion between himself and Prime Minister Tsipras, Schäuble laughed and said “I don’t think Mr. Tsipras would like to be compared to me!” before quickly adding that he, Schäuble, was “just a finance minister.”

As to the future of the shared European currency and the stability of the “European project,” Schäuble ended the interview by warning that “you can’t discount” future instability in the eurozone, but that if national governments remained dedicated to the European Union, it would only get stronger in the years to come.

Greece: Tsipras wins austerity vote, but his Syriza party splits

The vote for fresh austerity measures has revealed deep rifts in Greece’s ruling party. The Syriza government had come to power in January on pledges of putting a stop to five years of austerity imposed from abroad.

As thousands protested, parliament passed new austerity-for-credit measures with 229 votes in the 300-seat chamber. Sixty-four lawmakers opposed the cuts on the table and six abstained.

Prime Minister Alexis Tsipras had to count on opposition parties in order to pass the measures, leaving his coalition in question. Tsipras had made his about-face on austerity following grueling all-night negotiations in Brussels on Monday, giving in to lenders’ demands for immediate reforms to keep the euro as Greece’s currency.

“I acknowledge the fiscal measures are harsh, that they won’t benefit the Greek economy – but I’m forced to accept them,” Tsipras said early Thursday, making his final appeal for support.

In exchange for up to 86 billion euros ($94 billion), Greece accepted pension cuts, a higher value-added tax – a regressive levy that disproportionately affects the poor – an overhaul of collective bargaining and public-spending limits. Lawmakers agreed to sequester 50 billion euros from selling off public assets in a fund to act as collateral, effectively opening institutions to private bidders. The economy has shrunk by a quarter in the course of two previous credit packages and 25 percent of the population are unemployed.

Parliament speaker Zoe Konstantopoulou called the measures “social genocide.”

Varoufakis unbound

The 38 lawmakers who stayed true to Syriza’s pledge of no new cuts included former Finance Minister Yanis Varoufakis, who stepped down last week in hopes of improving relations with international creditors after 60 percent of voters had rejected new austerity in a referendum. As finance minister, he had frequently butted heads with Germany’s Wolfgang Schäuble and other eurozone finance ministers who would not relent on the austerity-and-privatizations programme they had set out for Greece. Stepping down from his post has allowed Varoufakis, no shrinking violet, to speak even more freely than he had.

In an article posted ahead of Wednesday’s vote, the German news magazine “Die Zeit” quoted Varoufakis as saying that it had always been Schäuble’s plan to “let Greece fall.”

Energy Minister Panagiotis Lafazanis and Deputy Labour Minister Dimitris Stratoulis voted against the package. Deputy Finance Minister Nadia Valavani stepped down.

Greece’s economy has nearly slowed to a halt over the past two weeks while banks were forced to close, which has disrupted the country’s trade with Germany.

 

OPINION: The honeymoon’s over for Tsipras

Greek Prime Minister Tsipras won the reform package vote in parliament but watched his party split as the bill passed. Now implementing the necessary reforms will be even more difficult, says DW’s Spiros Moscovou.

The mystifying process of governing has now been laid out in front of Greek Prime Minister Alexis Tsipras. For five months, he tried to impress the eurozone by constantly reiterating the words “democracy” and “dignity” rather than actually putting together a persuasive plan to tackle Greece’s fiscal problems.

Now it’s clear that he has utterly failed. Last weekend, he was forced to agree on a series of demands set by international creditors in order to keep Greece afloat. Last night he suffered the indignity of watching a large portion of his party, some 39 ministers and representatives, refuse to follow him on the path of pragmatism. A sizable wing of his governing Syriza party remains unwavering in its attachment to backwards populism.

The first savings and reform plans set by international institutions were only passed thanks to support from the opposition, or the “inner Troika,” as the Syriza’s furious lefties scornfully like to call the conservative Nea Demokratia, the social democratic Pasok and the liberal, left Potami parties. Tsipras now has to rely on these supposed enemies in order to ratify the still incomplete agreements with lenders. Willing members of Syriza and its junior coalition partner, AnEl, simply do not have the seats needed to reach the 150 votes needed to pass legislation in parliament.

Who is going to implement the reforms?

On the surface, it looks like there would be a broad, national consensus for Greece remaining in the eurozone, as well as for reforming the country. However, that consensus is a treacherous minefield. The opposition is doing its part to save the country, yet they smugly observe the irony that it is up to them to push the first “leftist memorandum” through Greek parliament. And they remain unwilling to enter any kind of governing coalition with Syriza, which itself seems to have been irreparably split into factions of idealists and realists after yesterday’s vote.

The expected reshuffling of the government, including the jettisoning of those calling for a return to the drachma, will only temporarily calm the situation. It is generally assumed that a third bailout package will almost certainly be initiated to save the country from total collapse – for now.

But who will implement the savings and reform requirements attached to the loans? Syriza, who are crying over being forced to abandon their leftist fantasies? Or the old parties, which didn’t exactly shine during their implementation of the first two bailout packages?

Getting these changes in place requires a hands-on, creative consensus that simply does not exist. Over the last five years, we have witnessed just how unfit Greece’s political system is for dealing with national crises. Carry on, and if absolutely necessary recycle, that’s the concept. Tsipras will also carry on, then he will grasp for new elections. Hopefully he won’t already be doing that this fall.tenesse

 

 

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