Saturday November 29, 2014 Search
Weather | Athens
16o C
10o 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 countrys 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 Europes 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, Greeces 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.

Lets 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 Greeces 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)  
Change of US president wont mean change of foreign policy
The presidential election paradox
SYRIZA needs a Plan B
Scraping together the 180 MPs will not be enough
Venizelos extends invite to Turkey at start of visit
Foreign Minister Evangelos Venizelos arrived in Ankara Friday night for two days of talks. Ahead of his visit he sought to make it clear that Greece is prepared to discuss maritime issues wi...
Vatopedi trial for 14 suspects
The Supreme Court decided Friday that 14 people should stand trial for the notorious property swap between the Vatopedi Monastery and the state six years ago. Those who will face charges of ...
Inside News
Q3 growth was bigger than thought
The provisional seasonally adjusted statistics for the Greek economy in the third quarter put annual growth at 1.6 percent, against an original estimate for 1.4 percent, according to a state...
Who will pay for the states ADMIE stake?
The state is currently unable to pay the amount required for the acquisition of a 34 percent stake in the countrys Independent Power Transmission Operator (ADMIE), as provided for in a plan...
Inside Business
BASKETBALL
One more emphatic win sees Panathinaikos make top 16
Panathinaikos has mathematically qualified to the top 16 of the Euroleague after another emphatic home win, this time against Bayern Munich, with an 87-72 score on Friday. Given the changes ...
SOCCER
PAOK is one win from Europa Leagues last 32
A late brace by Stefanos Athanasiadis gifted PAOK a precious win at Dynamo Minsk on Thursday, meaning that the Thessaloniki team is one win away from graduating from the group stage of the E...
Inside Sports
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
RECENT NEWS
1. One more emphatic win sees Panathinaikos make top 16
2. Venizelos extends invite to Turkey at start of visit
3. Vatopedi trial for 14 suspects
4. New proposals on way to troika
5. Cabbie who carried shooter claims he was threatened
6. Govt urged to allow Syrian refugees to move on
more news
Today
This Week
1. Change of US president won't mean change of foreign policy
2. Child molester suspect photo released by police
3. Greek economy expands 0.7 pct q/q in Q3
4. Lebanese FM: Cyprus may be jihadi transit point
5. Athens water supply 9-month profit falls 45 pct on lower charges
6. Armed man arrested on Thessaloniki campus
Today
This Week
1. Give Greece a chance
2. Extremism from a bygone era
3. Scientists expand excavation of ancient Amphipolis
4. Greece paralyzed by major strike, flights cancelled
5. Piraeus nightclub shooting leaves 3 seriously injured
6. Coscos Greek unit adds multinational rail-freight client
Find us ...
... on
Twitter
... on Facebook
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright 2014, H KAΘHMEPINH All Rights Reserved.