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Greece’s options to manoeuvre dramatically decrease

05 February 2015 / 15:02:00  GRReporter
2971 reads

Anastasia Balezdrova

The decision of the European Central Bank to cancel the acceptance of Greek government bonds after 11 February, which many analysts figuratively present as "pulling the plug of liquidity to Athens" has upset all but the new Greek cabinet and its supporters.

Following the reassuring message of the Ministry of Finance, according to which "in no way does the decision imply negative consequences for the banking sector," the office of the Greek Prime Minister described the decision as a means of "political pressure" to speed up the procedures associated with the conclusion of an agreement between Athens and its lenders.

Government sources stressed that the Greek banking system is absolutely secure and the Emergency Liquidity Assistance has provided liquidity to the banks.

Leading Greek analysts, however, do not share this view. Commenting for GRReporter, journalist and economic analyst Kostas Stoupas said the following:

"The decision of the European Central Bank is a "warning" shot to the new government and Greece, indicating that if it fails to implement the rescue programme, the Memorandum, as we used to call it, this will be followed by problems with the banks and their liquidity.

Greece's opportunities to negotiate have dramatically decreased. It may choose between accepting to implement a programme that is almost identical to the current one and leaving the euro zone in terms of chaos.

The probability of the euro zone, the European Central Bank and the International Monetary Fund yielding is very small, since Greek debt will no longer affect international markets in view of the fact that the bonds are no longer owned by private investors, but by countries, the European Central Bank and the International Monetary Fund.

The probability of Greece’s destabilization will affect the entire Eastern Mediterranean region and the Balkans."

In his Facebook profile, business consultant and former professor at Columbia University in New York George Prokopakis presented the following analysis:
 
"1. While hours are passing (not days or time in general, but hours) and the government is not submitting a framework proposal in compliance with the requirements of the situation, the number of things that can be saved to the summit of the European Union on 12 February is accordingly decreasing.

2. It is not possible for a coalition that is ruling with a far-right party to present in Europe a proposal that pretends to be reliable.

3. The "Varoufakis Platform", which Tsipras is supposed to have accepted in its entirety has already reached the end of its "path of life". Varoufakis should either support another policy (where could they find it?) or be removed from office.

4. The most important player in Greece, since the announcement of the decision of the European Central Bank, has been the Governor of the Bank of Greece. His independence must be protected at all costs. In no case must he yield to the requirements of an irrational policy.

5. The opposition should be ready and, without stupid phrases such as "I told you so", support a possible change in government policy. European opposition may not include carriers of far-right populism. New Democracy should be prepared to get rid of, or abandon, Samaras, Voridis and the like. PASOK should be ready to get rid of, or abandon, Venizelos. It is now time for Potami to understand that it should be engaged in politics.

6. The committees in support of the government that are inspired by authoritarianism should be isolated. Even if we are on the brink of disaster, it is not necessary to prepare fascism in advance.

7. Greece’s salvation and European orientation go along the one-way road of the last evaluation of the course of the financial assistance programme. The things that need to be done are clear. Some of the measures are quite hard but others have taken care of this. Mr. Tsipras can show maturity and change the course (see p.5). If he does not want to do so, he has two options: a) to withdraw and make place for someone else who wants to win the hand in favour of Greece’s remaining in the euro zone, b) drachma - the noise you hear comes from the engine of the helicopter. In addition to being a recognition of political failure, choosing to hold a referendum is a safe formula for total destruction. Until the time comes to hold it there will no longer be a topic on which to make a decision."

At the same time, global media present the events with a dramatic tone. French daily Le Figaro describes the decision of the European Central Bank as a heavy blow to Greek banks and state. According to the publication, this matte move of the European Central Bank is a drastic measure that aims to force the Greek government to negotiate with its European counterparts.

In an article entitled "Greek bank stocks tumble on ECB liquidity move" the Financial Times economic newspaper states that the reaction of the main Greek stock market was stark, with prices of bank shares falling by 25-30%.

"Collapse of the Athens Stock Exchange" is the headline of German newspaper Handelsblatt and the article states that panic is reining on the Greek stock market.

The rest of the headlines in the European press are as follows:

The Guardian: "Greece holds debt talks as ECB turns screw on Athens"

Tags: PoliticsGreek governmentEuropean Central BankLendersRescue programmeAthens Stock ExchangeLiquidity
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