Here we are again, so near and yet so far from the coast, in a balancing act of fear between disaster and blurred normality, yet with serious prospects of recovery. Our partners and creditors would like nothing more than to declare victory and leave, having realized that Greece has achieved much more than Portugal and that reforms and the economy’s restructuring cannot be done by force. There is something else, however. Even if we were to lose our minds completely and ask to sign another memorandum to receive some extra money, no PM or European Parliament would ever agree to hand over the cash.
Greek reality is complicated and there are a few hurdles to clear before a happy ending can be declared. The first concerns the troika’s demands with respect to the current negotiations in order for Greece to receive a final tranche of bailout cash before the end of the year. PM Antonis Samaras wants to avoid going to Parliament to ask for more painful measures before the presidential election. This is not possible, says the troika, so it’s now down to the talks between Samaras and Chancellor Angela Merkel. Samaras will press for the negotiations to be divided into two parts and for politically sensitive measures to wait for until after the presidential election.
The second hurdle concerns the debt. Our partners, who follow Greek affairs, have three choices: first of all, to present an unconditional outline for a solution to the debt, which is not easy to do; secondly, to declare that there is a solution but that it will be given only after the opposition agrees to it, or as soon as they find out who will govern the country after the presidential election; and thirdly, to leave things as they stand and leave the debt issue to be negotiated with the current coalition – if a president is elected by the current House – or with a new administration. For the time being they are not voicing their intentions. What is certain is that the IMF, which wants out, will push for a debt arrangement.
Greece could cover its cash shortfall if necessary. The country is in a position to draw money in order to pay back the IMF in the next two years. Besides, as soon as a debt solution is found the rating agencies will upgrade Greece and make life easier. But that’s where things get complicated. It would be infinitely easier to get the necessary 180 MPs on board if nothing dangerous reaches Parliament before the election and a solution to the debt becomes clearer. Think about it: no more memorandums, no more troika and the tough stuff for later. Samaras will most probably ask Merkel to have a little faith in the government, come up with new ways to keep a check on the reforms and allow him to overcome this hurdle. Her answer is unknown. Berlin is divided between those who don’t care who is in power as they will have to comply and those who suggest meeting Athens halfway, without handing out all the money and providing a debt solution in one go.
New elections mean that the markets will write us off for a while and prospective investors will disappear for a long time. The danger of finding ourselves out of cash due to ungovernability and uncertainty is evident, and here the dilemma will be even greater, irrespective of who will in power, either through memorandum-based supervision or domestic borrowing.