Theater of the Absurd

May 31st, 2015 3:54 pm | by John Jansen |

Via the FT:

Tsipras accuses bailout monitors of making ‘absurd’ demands

Greece’s chances of striking a deal to access a much-needed €7.2bn in rescue aid looked even bleaker on Sunday after Alexis Tsipras, prime minister, accused bailout monitors of making “absurd” demands and seeking to impose “harsh punishment” on Athens.

Mr Tsipras’s accusations, made in Le Monde newspaper, came only days after his government claimed an agreement was imminent. They have increased the sense of chaos around negotiations in the week many believe a deal is needed to avoid a Greek default.

On Friday, Athens is scheduled to make a €300m loan repayment to the International Monetary Fund that is being closely watched by creditors after some Greek ministers hinted that it might not be met without bailout aid. A further €1.2bn of IMF payments fall due over the subsequent two weeks.

Several eurozone officials fear that, without a deal this week, there will not be time for Greece to legislate and implement an agreed list of new economic reforms before the end of the month, when its bailout expires. The uncertainty has sparked large-scale withdrawals from Greek banks, with about €800m taken out in just two days last week — renewing fears of a full-scale bank run.

Greece’s three bailout monitors — the IMF, European Commission and European Central Bank — must sign off on the new reforms before the funds will be released, but in his Le Monde article, Mr Tsipras accused them of being unyielding in the face of significant Greek concessions.

“The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance,” Mr Tsipras wrote. “It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

The criticism appears directed at the IMF, which has taken the hardest line of the three institutions, particularly regarding cuts in public sector pensions, which Mr Tsipras described as already having been excessively slashed. EU leaders, including Chancellor Angela Merkel of Germany, have specifically warned Mr Tsipras that no deal is possible without IMF approval.

In an apparent attack on Berlin, Mr Tsipras also accused some within the EU of trying to break up the eurozone by centralising power among “core” euro members and tying the rest to “extreme neoliberalism” through EU budget rules. Germany has been the leading advocate of such rules and strong, centralised power in Brussels to enforce them.

“For those countries that refuse to bow to the new authority, the solution will be simple: harsh punishment. Mandatory austerity. And even worse, more restrictions on the movement of capital, disciplinary sanctions, fines and even a parallel currency,” he wrote, adding that such a path would mean the “abolition of democracy” in Europe.

Eurozone officials have in recent days accused Mr Tsipras’s government of using similar public statements as a negotiating ploy, attempting to divide the IMF from the European Commission — which has been urging a compromise deal more acceptable to Athens — and failing to engage in substantive talks in Brussels.

But Mr Tsipras himself has long been seen by creditors as their best hope for a deal. He personally intervened in February to extend the current bailout by four months after negotiations with more hardline lower-level officials faltered.

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