By Thomas Sideris
Financial suffocation. These two words characterize Greece at the moment.
Mario Draghi, head of the European Central Bank (ECB), has turned off the swivel for the provision of oxygen for Greece and said a large no to the release of Greek treasury bills.
Alexis Tsipras’s government blame him that together with Wolfgang schäuble, the German minister of finance, they are trying to tighten even more the loop for Greece.
However, could Mario Draghi do otherwise?
Of course not. Draghi represents maybe the most powerful institution of the European Union. What he merely does is to abide by the rules. Which are those rules, though?
The ECB cannot proceed with buying greek bonds, keeping in mind that the ones it already has, have overcome the allowed percentage, which has been set on the basis of the Quantitative Easing program (QE). Greece has already borrowed from the European Central Bank 100 billion euro. This loan represents 68% of the Gross domestic Product (GDP), and is another yet “achievement” for Greece, as it is the largest percentage in the Eurozone.
The ECB cannot buy bonds of a country without the positive evaluation of the adjustment program. At this particular moment the Greek bonds do not have the evaluation of the investment grade. Additionally, the ECB is not a political institution. In order for it to begin buying bonds, rules need to be followed, the basis of which is the successful fulfillment of the program.
Was the Greek government aware of all that at the very beginning? If not, or if they underestimated them, they are dangerously naive. If yes, and they have concealed them so as not to directly confront not only their voters but also the left part of their political party, they are simply dangerous.
The new minister of Finance, apart from other things, has introduced new terms. Most of the times terms which are not comprehensive enough. One of them was his “creative vagueness”. Creative vagueness is not to say anything specific and not to commit yourself on anything. This approach on the part of the minister of finance reminds me of of the well known fortune teller Pythia of the Greek mythology. Her soothsayings were never concrete and would leave all possibilities open. But one cannot set political decisions based on soothsaying.
In any case, I feel that the non commitment on something concrete and the “toughie” shown at the European partners were the choice of the Greek government. A choice, though, which seems like an inevitable collision of a car running on 150 kph towards a stable wall. It is clear that the easiness of the government to move from “creative vagueness”to a “creative concealing” of the actual facts has raged the European Partners who are now sticking the knife deep in the wound.
Greece has signed two memorandums already, which have led to the loss of thousands of jobs, to a deep humanitarian crisis, to the extinction of the medium and small businesses and the extinction of any initiative on development or investment. Sooner or later, they will have to sign a third Memorandum so that the financial swivel opens again.
The Greek government is playing a game with words. The troika (European central bank, European Commission and International Monetary Fund) have been named “institutions”, the Memorandum a “simple agreement” and its obligations a “creative vagueness”. However, the deeper meaning hides behind the words.
As I have written in a previous article for Zaman, the train of radicalism with Alexis Tsipras as the train operator will not stop in Greece. The government, in order to turn Greece into a viable country within the European environment, will have to make compromises. The big issue, however, are all those that had been promised to their voters and it is clear now that they are impossible to implement. A problem are also all those party members who are still protesting that the country should ripe the memorandums and not respect any agreements signed together with the European partners.
As long as the European Central Bank tightens the loop around Greece, the voters will put a harder pressure on the Greek government not to accept a new Memorandum and new measures.
I am convinced that a new election period and the formation of a national unity government is by no means impossible.