Monday, March 23, 2015

International Monetary Fund complains that Greece is its most uncooperative client ever

Officials from the IMF, the European Central Bank, and the European Commission, complained in a conference-call Tuesday that Greek officials are not adhering to the conditions of the bailout extension deal or cooperating with creditors.
The officials did not want to be identified since the call was private. A letter was also sent by the European Commission objecting to legislation that would give free food and electricity to households in poverty and also to allow tax arrears to be paid in instalments. The letter said that the laws were in violation of the bailout agreement. since they were not cleared by the Troika. International Monetary Fund(IMF) officials claimed that Greece was the most unhelpful client they had dealt with in their entire history. German finance officials said trying to get the Greek authorities to present a rigorous economic reform policy was like trying to ride a dead horse.
According to a Reuters report the teleconference was supposed to allow Greece to report on its reform process but instead Greek officials insisted that discussions should be held at the upcoming European Union summit on Thursday. One anonymous euro zone official said that for many people the teleconference "could be something of a last straw."
If the Greek government does not implement the unpopular austerity provisions of the bailout extension required by creditors, Greece may end up not getting the money needed for its upcoming debt payments. Tsipras is hoping to have a meeting with Mario Draghi, head of the ECB , Angela Merkel German Chancellor, French President Francois Hollande and Jean-Claude Juncker the head of the European Commission later this week in Brussels. Tsipras wants a political deal to unlock funds from the $254 billion bailout, but the euro zone officials may be in no mood to grant Greece any leeway as the Greek government goes ahead with reform policies without getting approval from creditors. Without concrete proposals and evidence that reforms the creditors want are being implemented, there will be no political agreement to release the funds. There may however be political agreement not to release the funds.
The Dutch Finance Minister Dijsselbloem said that Greece might require capital controls as happened in 2013 in Cyprus. His remarks helped Greek bank shares to lose over 5 percent. The Athens stock exchange lost 1.8 percent and interest on Greek bonds rose to a whopping 20.5 percent. Progress of technical personnel from the Troika working in Athens has been very slow. They too complained of the Greek government passing legislation whose implications for Greek finances was not at all clear and without consultation, a clear violation of the bailout extension agreement. Greece has large payments due as early as this Friday.
German Finance Minister Schaeuble said that time was running out for the Greek government. He noted also that Greece has insisted it does not want a third bailout program. He said: "We have the impression, and everyone who is dealing with the question shares the impression, that time is running out for Greece. They obviously have certain problems."
It is not clear how Greece could possibly continue to pay its debts without further loans.
As well as talking with European officials and meeting with Angela Merkel in Berlin, the Greek Prime Minister, Tsipras, also intends to visit Putin on April 8. Some worry that Greece's debt problems may lead the country to form alliances outside the west including with Russia. The US sent Victoria Nuland , the assistant secretary of state for European and Eurasian affairs to Athens to meet with Tsipras. She was active in seeing to it that Ukraine turned toward Europe. Now she no doubt will warn Tsipras not to cosy up to Putin.
The Greek government faces the impossible task of trying to implement its election promises, to show Greeks that the government can improve conditions, and at the same time convince its creditors that it is carrying out the reforms demanded as part of the bailout deal. But reform measures by the Greek government continually violate the terms of the bailout deal. The government then call the demands of the creditors blackmail. In a further slap in the face to the Troika or "institutions" the Deputy Finance Minister Nadia Valavani said that proceeds from any privatizations will be used ,not to repay debt as desired by the creditors, but for social programs. She said:"There will be a new Sovereign Wealth fund ... and the revenue will be used to fund the government's social policies and to support the social security system."Having annoyed all those parties who hold the purse strings, it seems unlikely that Greece will be able to get any concessions at all from euro zone officials.

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