Prime Minister Antonis Samaras’s statements in Berlin on Tuesday during a joint press conference with German Chancellor Angela Merkel on the one hand herald an amicable divorce with the International Monetary Fund and on the other signal the end of Greece’s dependence on eurozone loans, a prospect that implies a full return to the international markets.
The aim of this strategy is to disarm all of the key political arguments and commitments made by the main opposition in the hope that this will curb SYRIZA’s ascent to government.
The fact that Samaras decided to go public with this strategy, and especially so in the presence of Merkel, may mean that it enjoys the silent endorsement of the German chancellor – on the condition, most likely, that the next troika review supports such a policy.
On the other side, the IMF is eager to disengage itself from Greece and from having to channel funds to developed European states to the detriment of its support programs for developing nations.
Of course the disengagement of the IMF will mean a funding gap of around 12 billion euros, which the Fund had programmed to lend Greece at an interest rate of around 4 percent for the 2015-16 period. Samaras however is confident the country will be able to tap the markets and at better terms. His confidence is not wholly unfounded if we are to go by the results of a few rather timid recent forays, but the truth is that the confidence of the markets was dependent on the presence of the troika. It remains to be seen whether this confidence will remain if the IMF departs and the country’s other lenders relax their control.
Samaras’s decision not to seek any further loans from the eurozone will mean a significant rise in borrowing rates, currently below 2 percent – the markets loan money, they don’t give it away.
This is how things lie as far as Samaras’s strategy toward the IMF is concerned. As regards his certainty that Greece will not need more funds from the eurozone, this is based on a surplus as it appears on the books but which will not really take shape until money is assigned to growth.
From a political standpoint we have clearly entered a phase of gradual inoculation against the SYRIZA virus. The handouts began with the disbursement of part of the primary surplus to members of the armed forces and emergency services, the result of which was anything but expected. Tsipras responded at the Thessaloniki International Fair by making promises of a return of the bonus payment for those earning small pensions and to increase the minimum wage. The competition is bound to continue, though handouts are the opposition’s greatest advantage. The issue lies in whether the citizens will prefer the old school tactics being adopted by SYRIZA or the ersatz ones of New Democracy and PASOK.