Jul 11

schauble stare

Schauble Proposes “5 Year Grexit With Humanitarian Support”; What The Other Eurozone FinMins Are Saying On Greece (ZeroHedge, July 11, 2015):

As we await the verdict on whether Greece will be in or out, here are the earlier comments from the Eurozone finance ministers and others attending the Eurogroup meeting, via Reuters:

GERMAN FINANCE MINISTER WOLFGANG SCHAEUBLE

  • “We will have exceptionally difficult negotiations.”
  • “The problem is that that there was a situation at the end of the year that was very hopeful, despite all the scepticism of previous years, and that this was destroyed in an incredible way in the last months and hours.
  • “We are dealing with financing gaps which exceed everything we have dealt with in the past.”
  • “We are talking about a completely new three-year programme.”

LUXEMBOURG FINANCE MINISTER PIERRE GRAMEGNA

  • “We, as Luxembourg, because we hold the EU presidency right now, are definitely ready to discuss debt restructuring, finalising is another issue.”

SLOVAKIAN FINANCE MINISTER PETER KAZIMIR

  • “I see a huge problem with DSA (debt sustainability analysis), so long-term sustainability of the Greek debt. So now we will see what the institutions will bring on the table, what kind of finances and we have to assess it… This package would be appropriate for the completion of the second programme, but I’m afraid this is not enough for the third programme, for the ESM programme.”

EUROGROUP CHAIRMAN AND DUTCH FINANCE MINISTER JEROEN DIJSSELBLOEM

  • “We are still far away. It looks quite complicated. On both content and the more complicated question of trust, even if it’s all good on paper the question is whether it will get off the ground and will it happen. So I think we are facing a difficult negotiation.”
  • Will you talk about debt relief?
  • “I don’t know we will get to that.”
  • “There is still a lot of criticism on the proposal, reform side, fiscal side, and there is of course a major issue of trust. Can the Greek government be trusted to do what they are promising, to actually implement in coming weeks, months and years. I think those are the key issues that will be addressed today.”
  • (For Greeks to regain trust) “Well, they will have to listen to the ministers and the institutions first and see what improvements are needed. And they will have to show very very strong commitments to rebuild that trust.”

FRENCH FINANCE MINISTER MICHEL SAPIN

  • “Confidence has been ruined by every Greek government over many years which have sometimes made promises without making good on them at all. Today we need to have confidence again, to have certainty that decisions which are spoken of are decisions which are actually taken by the Greek government.
  • On debt restructuring: “France has always said there is no taboo about the debt. We have the right to talk about the debt.”
  • We don’t want there to be reduction in the nominal value of the debt because that is a red line for many of the member states in the Eurogroup.
  • “France … is a link, and we will play this linking role to the very end.”

ITALIAN ECONOMY AND FINANCE PIER CARLO PADOAN

  • “I expect a long finance ministers meeting on Greece. It is not very easy but we will do all we can.”
  • “The purpose of this meeting is to kick off negotiations on ESM which is a medium-term, very demanding programme and we are all here with open minds to reach an OK, a green light to start negotiations. The government, the Greek Parliament and the Greek people are positive towards starting what is the beginning of a negotiation. It is not about striking a deal tonight.”

MALTESE FINANCE MINISTER EDWARD SCICLUNA

  • “This (Greek issue) has to be solved today because it is a question of coming up with this framework which gives assurance to the finance ministers.”

IRISH FINANCE MINISTER MICHAEL NOONAN

  • “The Greek paper was silent on banking. Obviously the Greek banks are in difficulty now and it’s going to be hard to put them back on an even keel, so we need a full briefing on that. Secondly I said we needed a medium term sustainable programme. Sustainability depends a lot on whether the programme is sufficient to cause the Greek economy to grow and to create jobs… It is very hard to stimulate an economy when on the demand you are doing corrective work so they need more supply side initiatives which effectively means a lot of reform which doesn’t seem to be built into the programme.”
  • “I think the trust is now being rebuilt in the relationship with Greece. I would hope that trust would continue to be rebuilt today. That’s pretty important also.”

EUROPEAN COMMISSION VICE-PRESIDENT VALDIS DOMBROVSKIS

  • “It must be said that we are clearly making progress and the Greek government’s proposal actually is pretty much along the lines of what the institutions’ proposal was before the referendum. So clearly we see there is a willingness of the Greek to reach an agreement and also the vote in parliament showed that there is a parliamentary majority to move ahead with this programme.”
  • “What we should be discussing today is basically about giving a mandate to the European Commission in liaison with the ECB and in close cooperation with the IMF to start negotiations about this ESM programme.”

AUSTRIAN FINANCE MINISTER HANS JOERG SCHELLING

  • Asked about whether he was positive on a deal: “Yes and no. Of course it is a step ahead that Greece has finally delivered, surprisingly what was already agreed before and surprisingly after the referendum. What is missing are the details. The biggest item we have to talk about is what guarantees Greece can give to implement what has been agreed. We have seen for five years now that such lists are sent, but the implementing measures never happen.”

DUTCH JUNIOR FINANCE MINISTER ERIC WIEBES

  • “The Greeks have clearly made a step forward but at the same time we see that the institutions are critical of the plan, the missing specificities and they see that the plan is weaker in some areas than it should be. It is their suggestion to only start negotiations when these conditions are further filled in.
  • At the same time, many governments, mine too, have serious concerns about the commitment of the Greek government and also the power of the implementation. That has been the weak point because after all, we are discussing a proposal from the Greek government that was fiercely rejected a week ago, and that is a serious concern.
  • (On what the Greeks can do further) we have to discuss that. Clearly there has to be made a step that enables trust with all the financing parties. (What happens if there is no agreement tonight) That is basically up to the Greek government.”

IMF MANAGING DIRECTOR CHRISTINE LAGARDE

  • “I think we are here to make a lot more progress.”

EUROPEAN ECONOMIC AFFAIRS COMMISSIONER PIERRE MOSCOVICI

“Since the start, the European Commission had the objective, that of the integrity of the euro. It was to keep a reformed Greece in the euro zone.”
“I note that the Greek government has made significant gestures.”
“We (the creditors) have said the Greek reform programme could constitute a basis for a new programme.”
“Our general sentiment is that there need to be reforms, solid reforms, reforms appropriate to the Greek authorities and reforms that are implemented as soon as possible.”

* * *

And here are the punchlines:

First the Finns:

  • Finnish Parliament Committee Opposes Greek Aid Talks
  • Greek proposals don’t warrant negotiations on new bailout, public broadcaster YLE says, citing unnamed sources.
  • Finnish parliament’s Grand Committee adopted position regarding Greek bailout request on Saturday; stance won’t be published ahead of Eurogroup debate in Brussels, state secretary Olli-Pekka Heinonen told local media
  • MP Paavo Arhinmaki, head of Left Alliance, told Helsingin Sanomat newspaper he left dissenting opinion at Grand Committee meeting; said Greek govt proposals “could be basis to start talks”

And now, Greek nemesis #1, Schauble via Bloomberg:

  • SCHAEUBLE PROPOSES TIME-LIMITED `GREXIT’: FAZ.
  • SCHAEUBLE SUGGESTS 5-YR GREXIT, HUMANITARIAN SUPPORT: FAZ

More from German Focus, google translated:

The German Finance Ministry has communicated its negative assessment of the Greek proposals to other Euro countries on Saturday. “These proposals are missing centrally important areas of reform to modernize the country and to advance on the long term economic growth and sustainable development,” it said in the one-sided position paper, which was present at the Frankfurter Allgemeine Sonntagszeitung (FAS). Therefore they could “not be the basis for a completely new, three-year ESM program”.

Instead, the Treasury took two paths in the eye that remained.

One way: Greece improved its proposals quickly and comprehensively, with the full support of Parliament. The Ministry suggested among other things that Greece shall transfer assets amounting to 50 billion euros to a trust fund, which it sells and thus removes debt.

Way two: With Athens is negotiating a “time out”. It leaves the euro zone for at least five years and restructures its debt. However, it remains the EU Member and receives further “growth-enhancing, humanitarian and technical assistance,” says the “FAS”.

And here’s Reuters:

Germany’s Finance Ministry believes Greece’s latest reform proposals do not go far enough and has suggested two alternative courses for Athens including a “timeout” from the euro zone, the Frankfurter Allgemeine Sonntagszeitung (FAS) reported.

“These proposals miss out important central reform areas to modernise the country and to bring economic growth and sustainable development over the long term,” the FAS quoted the ministry as writing in a position paper.

Instead, the ministry set out two alternative courses for Greece. Under the first, Athens would improve its proposals quickly and transfer assets worth 50 billion euros ($56 billion) to a fund in order to pay down its debt.

Under the second scenario, Greece would take a “timeout” from the euro zone of at least five years and restructure its debt, while remaining a member of the European Union.

In other words, Germany just said kick Greece out, conditionally, for 5 years (it is not quite clear what Greece would use for currency in the meantime), quarantine it, and treat it as a third-world country until 2020. Somehow we doubt global stocks expected this outcome when they soared on Friday.

As expected, Greece quickly denied this:

  • GREEK GOVT OFFICIAL SAYS GREXIT PLAN NOT DISCUSSED IN EUROGROUP

And at least one member of the anti-German/austerity axis chimed in as well:

  • The idea of giving Greece a sabbatical from the euro area cannot be taken seriously, an EU official says in Brussels.
  • It is legally not feasible, makes no economic sense and is not in line with political reality, official says
  • It is time now for a serious discussion and solutions, not for reactivating academic, non-practical ideas, official says
  • Official says euro suspension is old idea floated by German academic Hans-Werner Sinn

But with Germany making its semi-officially position known, and with the reality that Greece would essentially have to abdicate sovereignty to assure Europe that it will comply with any additional bailout conditions and further spending cut demands (of which there will be plenty), just what is the other “serious solution” alternative here?

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