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Greek government seizes the money of embassies

15 May 2015 / 18:05:20  GRReporter
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The Greek government has sent a letter to dozens of diplomatic missions of Greece abroad, asking them to immediately return unspent funds.

According to the document referred to by the Greek newspaper To Vima, all embassies and consulates of Greece have been invited to send to Athens their unspent funds as well as the revenues from consular services (such as issuance of visas, powers of attorney and other documents). Until today, they only partly used all these amounts to cover the operating costs that the Greek Ministry of Foreign Affairs funds. The institution itself received only a small percentage of them and the tax services nothing.

The funds that the diplomatic missions must return mainly relate to covering the costs of stationery, cleaning products and more during the current two-month period.

Long-experienced diplomats state for To Vima that no similar document was sent in the past.

At the same time, the delayed payment of salaries in the public sector is already a fact. According to the Greek media, the 630 employees of the Payment and Control Agency for Guidance and Guarantee Community Aid are the first that have not received the advance payment of their salaries for the month.

Initially, they had to receive the money on 13 May. Later they were informed that the amounts would be transferred to their accounts on 14 May and today that they would receive their salaries on Monday, without being certain that this promise would be kept.

The particular institution was one of the first to deposit its fund reserves in the term deposit account at the Bank of Greece. The Greek government thus managed to pay its obligations to the creditors, the last of which was worth 750 million euro and settled last week.

The Ministry of Finance issued a statement on the case, specifying that public sector salaries and pensions for the first half of the month had been paid without problems within the usual time limits whereas the delay in the payments to the Payment and Control Agency for Guidance and Guarantee Community Aid was due to bureaucratic obstacles. Following the intervention of the Deputy Minister of Finance, the money would be paid tonight.

At the same time, economist Anatole Kaletsky claims that the European Union is threatening Greece not with a Grexit but with a lack of liquidity, which will lead to the fall of Alexis Tsipras’ government.

In today's article, he criticizes the tactics of Greece’s Prime Minister and Minister of Finance Yanis Varoufakis who "believe that they are threatening Europe with bankruptcy, facing it with the dilemma of a Grexit or unconditional debt write-off."

Kaletsky states that Greece's partners have a third option, namely to keep Greece in the euro zone without any liquidity which will collapse the domestic political support for Alexis Tsipras.

According to the economist, this is the best tactic for Greece, "in view of the fact that each month it finds it difficult to pay salaries and pensions." Kaletsky determines the strategy of the Greek cabinet as "doomed" because it can no longer use the primary budget surplus as a trump card in the negotiations and a possible default would cause much larger budget cuts than those required by the creditors.

Anatole Kaletsky believes that Europe is less concerned about a possible Greek default today and recalls what happened when Cyprus 'ignored the EU' two years ago. According to him, this shows that the default will be the preferred option.

It will require major budget cuts, resulting in the government's fall. "Then, instead of Greece's exit from the euro zone we will witness SYRIZA's exit from government. When Mr. Tsipras finds out that the rules of the game have changed, capitulation will be just a matter of time," says Kaletsky in his analysis.

Tags: PoliticsDiplomatic missions of GreeceFundsDelayed payment of salariesAnatole KaletskyGreek defaultBudget cutsFall of SYRIZA government
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