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Just as the danger of debt exposure to the European Central Bank and International Monetary Fund could not possibly get any more precarious after Greece’s default on the first installment of the repayment of its 394 billion euro debt, a dramatic U-Turn has been made by prime minister Alexis Tsipras.
Mr. Tsipras has proposed a harsher austerity deal in a desperate attempt to avoid an exit from the Eurozone and European Union by Greece, despite his staunch socialist Syriza party’s hard line view on austerity, and vocal intention not to repay any debt, backed by over 60% of Greek voters.
Mr. Tsipras held a referendum on austerity measures last week, and stated that the nation would not accept the European Central Bank and International Monetary Fund’s proposals for repayment, much to the jubilation of the Greek electorate who have become accustomed to living on free money to the extent that Greece, a nation with only 11 million citizens and low productivity, has been the subject of bail out after bail out and now owes over one third of the entire capitalization of the European Central Bank.
Indeed, the options for Europe were grim either way. Should Greece leave the Eurozone, it will have taken with it the 394 billion Euros, never to repay any of it whatsoever, exposing the entire Eurozone to a vast loss.
Alternatively, if Greece remains in the Eurozone and a European Union member state, its Syriza government will likely channel even more EU funds into Greece, generating even more liability. Greece’s population voted Mr. Tsipras into government based on his ethos of effectively milking the system rather than addressing the issue and driving Greece back toward a fiscal even keel by way of economic productivity.
At 8.00am today, it was reported by the Telegraph that Mr. Tsipras was at the time meeting with Syriza MPs before a vote later, and told them that he doesn’t have a mandate for Grexit, however there is no guarantee that this proposal will pass parliament later.
The coalition government has 162 seats in the 300-member parliament and pledged backing on a deal from a large section of opposition lawmakers. But failure to deliver votes from his own government would likely topple his coalition.
A prominent dissenter, Energy Minister Panagiotis Lafazanis, urged the government not to sign a third bailout.
“The choices we have are tough, but the worst, the most humiliating and unbearable choice is an agreement that will surrender, loot and subjugate our people and this country,” he told a business conference on Thursday, before the Greek proposal was finalized.
Greece had voted ‘no’ in last weekend’s referendum, he said, “and that will not be turned into a humiliating ‘yes.'”
More rallies, backing and opposing the government, are planned in central Athens today.
The Guardian reported that president of the parliament and firebrand of the left Zoe Konstantopoulou had a private meeting with Tsipras last night and did not take any questions from the press – a rare occurence.
This is after she announced that the house would not pass any more austerity – a sign, perhaps, that this proposal may get a slightly easier time in parliament this evening.
Four months ago, LeapRate analysed the situation that the European Union faces with regard to whether Greece remains a member, or whether it leaves. The conclusion was that if it leaves, the European Union will face extreme exposure to a debt which will never be repaid, yet has other nations with similar economic situations which may well tip over the edge, and that if it stays, it will remain a very large liability and will never be self sufficient.
For the official proposals from the Greek parliament, click here.