Jul 07

Ahead Of Dark ATMs, Import Shortages, Tsipras Goes Back To Brussels Begging For Bailout (ZeroHedge, July 7, 2015):

On the heels of Sunday’s referendum wherein Greeks essentially gave the greenlight for an unceremonious EMU exit should Europe decide to spurn the IMF and stick to a “no debt relief” policy for Athens, PM Alexis Tsipras and his newly-appointed finance minister Euclid Tsakalotos are making a final push to break the stalemate with creditors before the ATMs go dark and a supplier credit crunch creates widespread shortages of imported goods.

EU finance ministers will convene in Brussels first, followed by a meeting of European leaders which is scheduled to begin at 6 pm local time. According to Sueddeutsche Zeitung, the Greek delegation will table a proposal that looks quite a bit like what voters explicitly rejected on Sunday. Here’s more (Google translated):

The new one is nervous. Greece freshly crowned Finance Euclid Tsakalotos admitted before leaving for Brussels: “I can not hide that I’m nervous.” Finally, his country is in a very difficult situation. The self-confidence of the government in Athens still seems undiminished: “The No vote is the greatest political development since the fall of the Berlin Wall,” said the general secretary of the Central Committee of the Left Party Syriza, Tasos Koronakis.

In the discussions of the Euro Group in Brussels on Tuesday Tsakalotos goes to information the Süddeutsche Zeitung with a negotiating proposal which is not significantly different from the reform plan, the rejected on Sunday in a referendum by a large majority the Greeks.

Some changes to this plan, which is called in Greece simply “Juncker package ‘, but there are yet.

So the Greek government wants to keep the VAT rebates on the tourist islands continue. On the foreign guests especially coveted islands of Santorini, Kos, Corfu Samos or the negative votes were clearly above average.

In addition, the government wants the VAT for restaurants with 13 percent left, instead of 23 percent raise, as had been demanded by Brussels. And particularly controversial: The defense expenditure will Alexis Tsipras still not shorten as much as the plan of the institutions – provided for – that of the European Commission, ECB and IMF. This has to do with the consideration of the right-wing populist coalition partners. Defense Minister Panos Kammenos is head of the right-wing party Anel and vehemently opposes any further compromises with the military.

Greece has reportedly also requested a bridge loan of €7 billion which the government says it needs “in the next 48 hours” according to Bloomberg, citing Italian news agency Ansa. Finland’s Finance Minister Alexander Stubb immediately shot the idea down, saying the EU “is not looking at bridge financing at this particular stage.”

Meanwhile, some lawmakers and officials in Berlin, having long ago lost their patience with the situation, have now become openly hostile. Here’s Vice-Chancellor Sigmar Gabriel (Bloomberg, citing Stern):

“If we simply forgive debt without there being fundamental changes in Greece, we win nothing. “We can only talk about the possibility of reducing debt if the Greek government also shows that it is implementing reforms. Otherwise debt will immediately rise again the day after a haircut. It was naive to let Greece into the euro.” 

For his part, German Finance Minister Wolfgang Schaeuble (whose approval rating at home recently soared to an all-time high following his handling of the negotiations with Greece), says he is “waiting with excitement” on the “new” Greek proposal:

“Of course the EU has every obligation to help Greece. But it will all depend on the decision of the Greek government. We are waiting for that with excitement. Greek government has fought with great success that it does not want a program, it has also gained big majority for this. Everybody who knows European treaties knows that a debt cut would fall under the prohibition of a bailout.”

We’ll leave it to readers to determine how “excited” Schaeuble truly is about being back in Brussels for yet another round of talks with Greece.

Ultimately things are back to where they were two weeks ago, only now, the Greeks come equipped with a clear mandate not to accept punitive conditions in exchange for a deal.

So far, it isn’t entirely clear how much difference that will make at the negotiating table, and as we’ve discussed at length, granting debt relief for Athens in an effort to appease the IMF and bring the entire nightmare to a (temporary) conclusion, risks emboldening Syriza sympathizers in Spain and Portugal ahead of elections expected in under six months.

For their part, Greek officials will almost certainly face a brutal political backlash if Euclid Tsakalotos’ first order of business as FinMin is to present a proposal to creditors that effectively renders the entire referendum null and void.

Stay tuned, because you can be sure that the wires will light up with a fresh round of Brussels banter later today which will send the S&P surging followed by prompt denials which the S&P algos will soundly ignore. By now the game is quite familiar to everyone.

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