The ECB-EC-IMF Troika Seems Determined to Destroy Greece

European Central Bank President Mario Draghi addressed the European Parliament yesterday, warning members that time is fast running out to resolve the Greek debt crisis. Financial markets, spooked by the prospect of a default, saw shares fall across Europe after the latest breakdown in talks between Athens and its creditors killed hopes of a deal being reached at a Eurozone finance ministers (the Eurogroup) meeting in Luxembourg Thursday. Draghi told the Parliament : “We need a strong and comprehensive agreement with Greece. And we need it very soon.” As he spoke, the fragile state of Greece’s banks was evident, with Monday's deposit withdrawals increasing to €400 million. The capital flight increases Greece's dependence on emergency funding from the ECB. Draghi said there would be no immediate loss of ECB support, despite the collapsing relationship between Athens and its creditors. “While all actors will now need to go the extra mile, the ball lies squarely in the camp of the Greek government to take the necessary steps,” Draghi said. ~~~~~ Alexis Tspiras, Greece’s Prime Minister, gave no sign of bowing to Eurozone demands that Greece make the state pension less generous, raise VAT, and reduce his government’s plans to reform labor laws in favor of workers. Tsipras told a Greek newspaper : “We will await patiently until the institutions accede to realism. We do not have the right to bury European democracy at the place where it was born.” Later, an EU official responded : “He may not have time for patience.” Tsipras blamed “political expediency” by lenders for the impasse and their insistence on new cuts in pensions “after five years of looting under the bailouts.” Tsipras's remarks infuriated European Commission (EC) officials in Brussels, who released details of how attempts to revive talks on Sunday broke down in less than an hour. EU officials said the “last-chance” negotiations led to a worsening of the situation as the Greeks sought to reopen issues already agreed. The officials were deeply pessimistic that a deal can be struck : “We are ready to convene at very short notice. The only condition is that something serious is on the table that makes discussions productive. That has not been possible.” ~~~~~ But, top Greek government sources forcefully rejected the EU claim that the Greek government agreed to measures which it later rejected, causing the collapse in talks on Sunday. A government source told the Guardian : “What we said at a dinner [attended by] Juncker last week was that if the whole agreement, the package of reforms, was economically viable we, in turn, could move towards their fiscal targets for 2015 and 2016....We never agreed to any of their baseline scenarios, or what would be done, or that we would reduce pensions and to leak that is very misleading.” One source added : “It is up to our European partners to decide whether, after six years of recession, the priority should be a strong reform program to counter tax evasion, the power of the elites and the failings of the Greek public administration or yet more recessionary measures, yet more cuts in pensions and real wages.” Another Tsipras insider said : “It is also time for a decision whether Europe can encompass a government and people that have set social and economic priorities somewhat different from the mainstream....to see whether pluralism, fairness and democracy are still European values worth preserving.” ~~~~~ Greek finance minister Yanis Varoufakis said he is not planning to present new proposals at the Eurogroup finance ministers meeting on Thursday. A German newspaper interview published today, quoted Varoufakis as saying he would not present a list of reforms : “...because the Eurogroup is not the right place to present proposals which haven’t been discussed and negotiated on a lower level before.” However, Varoufakis said the Greek negotiating team is “available at any time” to find a comprehensive solution with its partners, adding that officials representing Greece’s lenders need to return to the table “with a clear, robust mandate.” Varoufakis later spoke at a Berlin cathedral, repeating his call to German Chancellor Angela Merkel to give Greece a “speech of hope,” to signal that Europe is ready to end its demands for austerity, calling for hope similar to that given to Germany at the end of the Second World War. Greece’s current bailout package expires at the end of June and Athens must pay €1.6 billion to the IMF by June 30th, requiring the release of a further €7.2 billion in bailout funds in order to meet the payment. In return, Greece’s creditors - the ECB, the EC and the IMF - demand economic reforms. As Brussels considers how to handle a Greek default, Germany is said to be particularly worried about the risks of social breakdown in Greece. Unnamed German government sources told Munich’s Süddeutsche Zeitung Sunday that an emergency summit on Greece could be convened in Brussels as early as Friday if the Eurozone finance ministers fail to make a breakthrough on Thursday in Luxembourg. ~~~~~ But, today, positions seemed much hardened. Media reports indicate that Greek Prime Minister Tsipras said the IMF had “criminal responsibility” for Greece’s debt crisis, calling on its European creditors to assess IMF policies. Tsipras told his parliamentary group : “The time has come for the IMF’s proposals to be judged not just by us but especially by Europe....The IMF has criminal responsibility for today’s situation.” Indeed, in 2015, the IMF has hardened its insistance on further cuts to Greece’s pension system - with pensions already cut by 50% - and a rise to 23% in value-added tax on basic goods, like electricity, which Athens says will only deepen hardships for ordinary Greeks. Tsipras was blunt : “Right now, what dominates is the IMF’s harsh views on tough measures and Europe’s on denying any discussion over debt viability....The fixation on cuts...is most likely part of a political plan...to humiliate an entire people that has suffered in the past five years through no fault of its own. The time has come for the IMF’s proposals to be judged in public...by Europe,” he told the MPs of his radical left Syriza party. ~~~~~ Dear readers, it's hard to argue with Tsipras when last Friday IMF President Christine Lagarde urged the EU creditors of Ukraine - with more 2015 unpayable installments to them and the IMF than Greece - to forego payments without declaring Ukraine in default, and adding that the IMF would use its "Arrears" program to arrange Ukraine's IMF 2015 payments if Kiev is unable to pay. (Read the letter here : http://www.imf.org/external/np/sec/pr/2015/pr15272.htm). Just what is going on in the EU and IMF? Why do they seem intent of finishing their job of destroying Greece? Lagarde's letter ends with this sentence : "I believe that their program warrants the support of the international community, including the private sector, which is indispensable for the success of this program." This isn't financial oversight or safety-netting as we would expect. It is pure ECB-EC-IMF politics being played out over the bones of a Greece already gravely wounded by them. US Treasury Secretary Jack Lew telephoned Alexis Tsipras to urge him to reach a realistic compromise, urgently. The Treasury said Lew underscored the urgency of Greece making a serious move to reach a pragmatic compromise with its creditors.” Instead of forcing Greece to submit, Lew should have held a conference call with Draghi, Juncker, Schäuble, Merkel and Lagarde. The message? Back off - renegotiate terms that make it possible for Greece to survive and recover. Or else, the US will put a hold on its IMF payments -- which are 17% of the IMF's balance sheet, the second being Japan at 6.5%. If Lagarde, Merkel, Schäuble, Juncker and Draghi want to play unfair and destructive hardball, the opponent should be someone their size - America, not Greece.