Saturday May 23, 2015 Search
Weather | Athens
14o C
09o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Rough landing ahead

By Alexis Papachelas

Greece is in for a very rough landing, but its intensity will depend on two factors: first, the result of parliamentary elections on June 17 and, second, the reactions of the countryís foreign lenders -- the EU and IMF -- and Washington.

Scenario No1: New Democracy wins the elections and forms a coalition government with PASOK and, possibly, the Democratic Left. The new government tries to renegotiate the loan agreements without risking the flow of bailout money from its creditors. This will not be an easy task.

Expectations in Greece are high, perhaps too high, about how much room for bargaining we have. Either way, the troika may offer some limited concessions, as it were, that mostly concern the extension of the fiscal adjustment period and an additional debt haircut in a few months. A possible collapse of Spain would most likely make Europeís response a bit more flexible. This, however, does not apply to the IMF. The Washington-based organization operates on the basis of very strict rules, providing German Chancellor Angela Merkel and like-minded Europeans with the perfect alibi against skeptics in other parts of the continent.

Even if they were to accept a renegotiation, Greeceís European peers and lenders will not back down on reforms and privatizations. But neither will SYRIZA.

The question is whether the hard-left party will opt to extend its opposition beyond Parliament. The risks are clear: if the new government fails to achieve a major renegotiation of the deal, the troika will be tempted to turn off the spigot of money to Greece, the left will block all reforms and the country will be in for a major political crisis. The ND-PASOK government will have to make a huge effort and our lenders will have to be extremely lenient toward Greece if we are to see this through. In any case, this is the most optimistic scenario.

Scenario No 2: SYRIZA forms a government with Democratic Left and/or PASOK. This could trigger a collapse of the banking system before the new administration is even sworn in. Some Greeks like to attack NATO and enjoy its protection at the same time; similarly, they like to vote for SYRIZA and still hope that ND will come first at the polls. Regardless of what they voted for, of course, if things go awry they will run to the nearest bank.

Letís say that we clear this obstacle. An inexperienced government that relies on a motley crew of partners is called upon to rule at the most crucial moment. The troika halts funding to Greece and then starts a game of poker that could result in anything from the breakdown of the first leftist government to expulsion from the eurozone.

Political time will accelerate, dilemmas will be critical and will mandate instant answers. Again, the question will be about the tolerance level of the Europeans and the IMF. How far are they willing to go without pulling the plug? In other words, when will the ECB stop funding Greeceís banks and thus shove the country outside euro territory?

Some Europeans have proposed an emergency plan in case everything goes wrong for Greece: Greek banks come under the supervision of the EU that maintains hire-and-fire power. This would give a Greek government room to bargain with the troika, and to even freeze payment of salaries and pensions, without jeopardizing bank deposits.

Of course, there is Scenario No 3. This is the worst-case scenario. Failure to form a government, because of the election outcome or the rapid collapse of the new government, leads to complete paralysis. There is no easy or obvious solution here because there is simply no money to hold another election. The only solution would be a national unity government.

Whichever scenario ends up prevailing, this will certainly not be a dull summer.

ekathimerini.com , Monday June 4, 2012 (19:04)  
Consensus is key
The other inequality: how the state spends our money
Reform not stimulus is way out for Greece
A catalyst for change
Deal no closer following PMís meetings in Riga
Athens believes that Greece could still clinch an agreement with its lenders but probably at the start of June, rather than by the end of this month as it had previously hoped, following the...
Greece to back NATO-led campaign against ISIS, Kammenos says
Greece will join the United States and other NATO members in efforts to defeat militants of Islamic State (ISIS), an issue which is expected to be discussed in the summit of the transatlanti...
Inside News
Car sales drop a gear on VAT rate uncertainty
Different scenarios of changes to value-added tax rates have paralyzed the car market in the last couple of weeks. Expectations for a rate cut from 23 to 18 percent, and the governmentís int...
Bulk of loan requests comes from food service
The Greek growth model for small and medium-sized enterprises during the period of the crisis will have to change, senior banking officials stress. The majority of demands for corporate fina...
Inside Business
SOCCER
Greece escapes soccer suspension, FIFA happy with changes
FIFA says it is satisfied with changes made to sporting law in Greece, and has dropped a threat to suspend the country from international competition. In a letter to the government dated May...
SOCCER
Four-goal Panathinaikos thrashes Asteras away
Panathinaikos thrashed Asteras at Tripoli to gain an early advantage in the race for a spot in next seasonís Champions League qualifiers, as the Super League play-offs got under way on Wedne...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
†RECENT NEWS
1. Deal no closer following PMís meetings in Riga
2. Greece to back NATO-led campaign against ISIS, Kammenos says
3. SYRIZA, ND waver over agreement
4. Nearly 800 irregular migrants detained as EU mulls refugee relocation plan
5. Car sales drop a gear on VAT rate uncertainty
6. Bulk of loan requests comes from food service
more news
Today
This Week
1. Merkel stamps out brief optimism on Greece after Tsipras talks
2. Lessons from Israelís tech miracle
3. Tsipras to meet Juncker on second day of Riga summit
4. Civil aviation staff to hold walkout on holiday weekend
5. Banks will be asked to revise their restructuring plans
6. EOPYY struggles for funding, sees overdue debt rise
Today
This Week
1. The Greek-German breakthrough that didnít come
2. Conspiracy madness
3. Greece came close to not paying IMF
4. National self-awareness put to the test
5. Albanian demarche raises concerns about possible territorial claims over Greece
6. Greek endgame nears for Tsipras as bank collateral hits buffers
†††Find us ...
††... on
Twitter
†† ††... on Facebook ††
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2015, H KAΘHMEPINH All Rights Reserved.