German firm takes over 14 privatized Greek airports

The Greek government gazette reveals that a German company Fraport AG has been given the rights to operate 14 regional airports. Fraport AG also runs the Frankfurt airport in Germany among others.

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This is just the first of many expected privatization moves as agreed to as part of the bailout deal. Syriza the major party in the Greek coalition government had opposed such privatizations during the election campaign but now has agreed to an extensive program that will be overseen by technical staff from the lenders. Several of the airports are on popular tourist islands.

The deal represents the first privatization decision since the signing of Greece's third bailout deal worth 86 billion euros. Far from being able to repeal the austerity conditions and privatization programs of the earlier bailout deals, the new deal contains an even more extensive and more controlled privatization program than the first two deals and imposes even harsher austerity conditions. Rather than face a bankruptcy and a possible Grexit, Greek Prime Minister Alexis Tsipras agreed to almost every bailout condition that he had earlier opposed. The airport deal will yield 1.23 billion euros or about $1.37 billion US. Several of the airports are on islands that are popular tourist destinations.

The bailout deal needs approval in a number of Europeans countries. It has already been approved in Spain and Estonia. Germany approved the deal by a vote of 454 in favour, 113 against, and 18 abstentions. The bailout agreement will release 13 billion euros just a day before Greece must pay 3.2 billion euros to the European Central Bank. Much of the bailout money will simply be recycled back to the lenders as loan payments. When the agreement was announced on August 11th the Greek stock market rallied. Last Friday, when Tsipras was able to have the agreement ratified in parliament dozens of Syriza party members voted against the deal. Tsipras may call for a vote of confidence in the government this week.

While many economists and the IMF believe that the deal is not workable unless there is further debt relief including a possible write down of some Greek debt, in the short term the provisions will provide ample opportunity for private corporations, many outside of Greece, to buy public assets at fire sale prices. Assets for sale include the national lottery, the port of Piraeus, and large land areas on islands such as Corfu. Privatizing assets such as the national lottery will generate a one time cash injection into government coffers but deprive the government of a reliable and constant revenue stream in the future. That revenue stream will enrich whatever corporation purchases the port.

Greece and Israel sign status of forces agreement

Greece and Israel signed a status of forces agreement in Tel Aviv that offers legal defense to the forces of each country while training in the other's country.

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The accord was signed by Greek Defense Minister Panos Kammenos and Moshe Ya'alon, his Israeli counterpart. The only other country with which Israel has signed such an accord is the U.S. The two also discussed continuing defense ties between Israel and Greece. Ya'alon said:“We very much appreciate your visit here during a difficult period for Greece. This underlines the importance of relations between the countries. We wish the Greek people and Greece itself success in its effort to overcome the economic challenge. We pray for that since we believe Greece is a very important country, with a history and a contribution to the history of humanity.”

Ya'alon also praised the joint training exercises between the Israel Defennse Force(IDF) and the Greek armed forces within Greece. The Israeli air force held joint military exercises with the Greek air force last April. The exercises took place in Greek airspace and lasted for several days.

Ya'alon also brought up the topic of the nuclear agreement with Iran: “We perceive Iran as a generator and central catalyst to regional insecurity through its support to terrorist elements in the Middle East, particularly Shi’ite terrorism, though not only Shi’ite. And of course, the Iranian ambition for regional hegemony leads the regime in Tehran to undermine the stability of [other] regimes, which creates a challenge for all of us."

Kammenos, a member of the Independent Greeks a right-wing nationalist party that is part of the Syrza-led coalition, said the “Greek people are very close to the people in Israel” and that military relations between the two countries are good. He also mentioned Iran as a threat: “If one Iranian missile makes its way to the Mediterranean, this could be the end of states in this region.". I am not aware that Iran has ever threatened Greece. That Syriza would appoint Kammenos rather than a leftist from Syriza as defense minister is rather surprising.

This close cooperation with Israel is not in keeping with parts of the Syriza platform which supports leaving NATO and not having any military relations with Israel:Disengagement from NATO, closure of NATO military bases, prevention of military cooperation with Israel, no Greek soldier in war fronts outside the country. SYRIZA Party Program Resolution, 2012.In 2012 part of Syriza's election program said the disengagement of Greece from NATO was a stable and unchanging position of the party. Yet Prime minister Tsipras said on May 15 2014: "I say, with all the strength of my voice, Greece is a country that belongs to the West, to the EU and to NATO. This is not under question."

Given actions such as these, it should not be surprising that Syriza signed a deal that went against everything that Syriza had ever stood for. There were other signs that Syriza was hardly the leftist party that it was portrayed as in the mass media, for example Syriza's attitude towards cuts in military spending: "One of the oddities of Greece’s bailout programme has been that, despite five years of punishing austerity, its military budget remains amongst the highest in the EU." Greek proposals to creditors suggested a military budget cut of 200 million euros. The creditors demanded a cut of double that but Syriza refused. What type of strange behaviour is this for a leftist party to be less willing to cut the military budget than its conservative creditors? Perhaps, Syriza wanted to defend Greece against Germany!

German Grexit plan offer probably better than bailout plan accepted by Greece

Greek negotiators finally arrived at a deal for a further bailout from the European Stability Mechanism (ESM) and the IMF. The deal has harsher austerity conditions than the one rejected by over 60 percent of Greeks voting in a recent referendum.

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The details of the agreement with the European Stability Mechanism can be found here. Accepting this deal meant ignoring any red lines that remained for Greek negotiators. The deal imposes even harsher austerity conditions on Greeks, as well as forced privatizations of state assets. Even so, many leftists and others still support the deal as better than a Grexit. A Grexit was actually mentioned as a possibility by the German Finance Minister Schaueble and the German Foreign Ministry as an alternative to another bailout. The German newspaper Frankfurter Allgemeine Sonntagszeitung (FAS) reports the latest reform proposals from Greece did not go far enough and suggested two alternatives in a position paper:"... the ministry set out two alternative courses for Greece. Under the first, Athens would improve its proposals quickly and transfer assets worth 50 billion euros ($56 billion) to a fund in order to pay down its debt.

Under the second scenario, Greece would take a "timeout" from the euro zone of at least five years and restructure its debt, while remaining a member of the European Union."During the timeout period of the second scenario Greece, as a member of the EU, would still qualify for "growth enhancing, humanitarian, and technical assistance." The majority of creditors apparently regarded this second scenario as not worth discussing and a Greek official claimed that indeed the Grexit plan was not even discussed in the Eurogroup. Instead we find in theactual agreement the first scenario with precisely the same amount in the fund as suggested in the German Foreign Ministry position paper:".. to develop a significantly scaled up privatisation programme with improved governance; valuable Greek assets will be transferred to an independent fund that will monetize the assets through privatisations and other means. The monetization of the assets will be one source to make the scheduled repayment of the new loan of ESM and generate over the life of the new loan a targeted total of EUR 50bn of which EUR 25bn will be used for the repayment of recapitalization of banks and other assets and 50 % of every remaining euro (i.e. 50% of EUR 25bn) will be used for decreasing the debt to GDP ratio and the remaining 50 % will be used for investments.This fund would be established in Greece and be managed by the Greek authorities under the supervision of the relevant European Institutions. "

Note that the process while carried out by Greek authorities is under the "supervision of the relevant European Institutions." The Greeks no longer control their own privatization process, nor do they control what happens to the proceeds, half of which go to pay back the bailout loans! So foreign investors can buy Greek assets and half the funds just go back to the "institutions." Only one quarter can be used for investment and no doubt that investment must be approved by the institutions.

The new agreement ensures not only that all Syriza's red lines have been breached but that with one exception, anti-austerity legislation passed earlier that might have breached the conditions of the previous bailout must be rescinded and any new legislation must be approved by the institutions:".. to fully normalize working methods with the Institutions, including the necessary work on the ground in Athens, to improve programme implementation and monitoring. The government needs to consult and agree with the Institutions on all draft legislation in relevant areas with adequate time before submitting it for public consultation or to Parliament. With the exception of the humanitarian crisis bill, the Greek government will reexamine with a view to amending legislations that were introduced counter to the February 20 agreement by backtracking on previous programme commitments or identify clear compensatory equivalents for the vested rights that were subsequently created."

No wonder in social media the new agreement is called a coup. John Pilger notes just a few of the ways in which Tsipras not only jettisoned almost completely the Syriza program but also went quite counter to his promise to negotiate a better deal:Prime Minister Alexis Tsipras has pushed through parliament a proposal to cut at least 13 billion euros from the public purse – 4 billion euros more than the “austerity” figure rejected overwhelmingly by the majority of the Greek population in a referendum on 5 July. These reportedly include a 50 per cent increase in the cost of healthcare for pensioners, almost 40 per cent of whom live in poverty; deep cuts in public sector wages; the complete privatization of public facilities such as airports and ports; a rise in value added tax to 23 per cent, now applied to the Greek islands where people struggle to eke out a living.

Had Syriza planned for Grexit in the early stages of negotiations, it would have been able to press for Germany's alternative scenario as a far better alternative to a fire sale of its assets with the money used mostly to pay debt. It really does not matter that Germany and other countries want a Grexit because they consider Greece a burden to the eurozone and its taxpayers, a Grexit would still free Greece from being ruled by creditors and at least give them control of their own legislature and resources. Surely that is better than a promise of three years of debt slavery and a possible debt restructuring but no "haircut." What is required immediately by the deal is proof that Greece is serious about cutting pensions, boosting taxes even on those least able to pay and other wholly regressive policies. All of this being implemented by those the media calls "radical leftists."

While Greeks voted NO, Tsipras will promote the YES voters views

Greeks rejected a proposed deal that their government had put to a referendum rather than accept. The same government is now agreeing to negotiate an agreement that will bring even more austerity and harsher conditions.

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While over 60 percent of Greeks voted NO to acceptance of a plan proposed by creditors that would have continued and even increased austerity measures imposed as part of the previous bailout loan, the NO voters have in effect lost. The Greek government is returning to negotiate but has already erased the two red lines remaining in their former negotiating stance and acceded to the demands of creditors that the Finance Minister Yanis Varoufakis resign.

There is one possible bright spot in negotiations — the issue of a partial debt write-off is being pushed by the IMF, although this would come at the cost of further cost reductions such as pension cuts. Christine Lagarde, head of the IM,F said Greece needs to continue cost-cutting reforms: "The other leg is debt restructuring, which we believe is needed in the particular case of Greece for it to have debt sustainability. That analysis has not changed. It well may be that numbers may have to be revisited but our analysis has not changed."

It is not clear if other creditors will agree to this. It will be politically unpopular in many EU countries to have debt owing to their treasuries by Greece to be written down. Some countries may be even pressing for creditors to force a Grexit on Greece rather than providing Greece any more loans at all. Yet Greek negotiators are still taking the position that they will do whatever is necessary to reach a deal. Immediately after the NO vote this was evident.

The finance minister, Yanis Varoufakis, had announced that if the YES vote was successful he would resign. The NO vote triumphed by a large margin showing that the majority of Greeks supported Varoufakis' position that Greece simply could not be forced to suffer even more austerity. Instead of working with others to put pressure on creditors for a better deal, what does he do? He resigns. Even in his resignation statement, it is clear that his resignation is acceding to creditors' demands:Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today. I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.

So the first thing that Tsipras does with his new mandate is give in to a suggestion that Varoufakis, who sometimes annoys officials on the other side, must resign.

The irony to this is that Varoufakis has not been meeting with the creditor groups since late April. The new finance minister Euclid Taskalatos has been in charge since then and Varoufakis only remained behind the scenes. The fellow that was involved until the very last and rejected the final offer along with Tsipras was Taskalatos. Nevertheless even though the move is mostly symbolic, the Greek government must show its willingness to accede to creditor demands, a position that the Greek populace had just rejected.

Instead of keeping its red lines on pension reform and taxes, a letter from the Greek government to the European Stability Mechanism is requesting a three-year loan explicitly promises that it will meet demands by creditors for reforms in those key areas: The Greek government promised on Wednesday it would start pension and tax reforms next week, as demanded by creditors, in return for a three-year loan to drag its financial system back from the brink of collapse.The complete letter can be found here. It was signed by Euclid Tsakalotos, the new finance minister.

The letter does say the Greek government will implement a set of measures related to tax reform and pension related measures. However, it gives no details at all. We should know tomorrow if the measures measure up to creditor demands . They have not in the past. These measures are to be implemented as early as next week. At least the letter promises the Greek government must produce specific reforms by tomorrow: The Greek government will on Thursday 9 July at the latest set out in detail its proposals for a comprehensive and specific reform agenda for assessment by the three Institutions to be presented to the Euro Group.

The letter is a masterful construction that brings up the issue of shaving down debt while promising to meet all its financial obligations:As part of broader discussions to be held, Greece welcomes an opportunity to explore potential measures to be taken so that its official sector related debt becomes both sustainable and viable over the long term.Greece is committed to honor its financial obligations to all of its creditors in a full and timely manner.

We reiterate the Greece's commitment to remain a member of the Eurozone and to respect the rules and regulations as a member state.There is not even the slightest hint of any threat to leave the euro zone should the government be required to erase their red lines and also sell out their own citizens.

There are no doubt splits between creditor groups. It may very well be that a majority of creditors have already decided that there will be no more loans and that their own Plan B for a Grexit should start to unfold. This at least would be more in keeping with the NO vote even though it will impose even more suffering on the Greeks over the shorter term.

Wall Street Journal article argues Greece planned a Grexit from the beginning

An article by Simon Nixon in the Wall Street Journal suggests senior Greek officials such as prime minister Tsipras and economy minister Yanis Varoufakis had from the beginning decided creditors would never extend reasonable terms to Greece.

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According to this narrative Greece could not simply proclaim this aim outright and work for a Grexit, since a considerable majority of Greeks wanted to remain in the euro zone. Nixon notes that Tsipras himself denies he had a deliberate plan for a Grexit and describes such accusations as lies. Politicians have been known to lie too. Nixon says if Tsipras had planned to take Greece out of the euro zone from the start of negotiations in January, he can hardly imagine what he might have done differently:He won the election on a pledge to respect the overwhelming desire of voters to remain in the eurozone, which meant he had no choice but to go through the motions of negotiating with Greece’s creditors for as along as they were willing to indulge him. If Grexit was always his goal, then his only challenge was to ensure the talks dragged on until the bailout expired, capital controls were introduced and the country defaulted, making a euro exit hard to avoid. The only risk to such a strategy was a bank run before the bailout expired, in which case politics may have intervened.

Note that Mr. Nixon's description of Tsipras' election campaign pledge leaves out a significant aspect, namely the strong anti-austerity platform that was also crucial to his campaign and consequent election of Syriza. What Tsipras and others could have done differently is to have from the very beginning of negotiations stressed that if a reasonable compromise deal was not forthcoming, Syriza had a Plan B of default and Grexit. At the same time they could have elaborated policies for a Grexit and informed Greek citizens what would be involved so that they would be prepared should no reasonable deal be possible. Instead, Varoufakis and Tsipras both said they would do whatever was necessary to reach a deal, a tactic that tells the creditors that they can demand all they want and Greece will not leave the negotiations.

Tsipras could have explained ages ago that the negotiations were going nowhere and at that point called for a referendum asking whether Greeks wanted to continue negotiations or default and return to the drachma. If a referendum had been called then it would give time for debate and have some legitimacy. The present referendum is regarded as not legitimate by many analysts and is based on a deal that is no longer even on offer since the present bailout ran out and Greece went into default at the end of June. Jim Yardley in the New York Times notes:

"Imagine the fate of your country hangs on a yes-or-no question.The question is drafted in cryptic, bureaucratic language and asks you to decide on an economic program that no longer exists. Leaders in neighboring countries are begging you to vote yes. Your government is begging you to vote no. Now you can understand what it feels like to live in Greece, land of debt, sunshine and, these days, profound political weirdness. The country is approaching one of the most important votes in its modern history on Sunday — one that could redefine its place in Europe — yet many people acknowledge they barely have a clue as to what, exactly, they are voting on."

From the first, Tsipras and Varoufakis have tried to mislead the Greek voters. For example, claiming a victory over the Troika when their only real victory was to convince officials to refer to the Troika as "the institutions." There were numerous "red lines" drawn, almost all of which were eventually withdrawn — often with a positive spin that a deal was now close. Optimism alternated with harsh criticism of creditor proposals that poisoned the negotiating atmosphere. Through all of this there is no hint of an alternative or any attempt to educate the Greek public as to what a Grexit would look like or mean for them. There was no attempt to counter those who claimed that a Grexit would be a disaster for Greece and was not a reasonable alternative.

Even when Tsipras rejected the final offer from creditors and called for a referendum, he still made last-minute attempts to broker a deal that would have made any referendum irrelevant after praising it as an exercise in democracy. Surely these actions show Tsipras still wants a deal even though Merkel and others have made it clear there will be no negotiations until after the referendum. Given the facts, evidence seems to point to many on the creditor side wishing for Greece to depart from the euro zone, while Tsipras and the Greek government are doing everything possible to remain in the zone. Those who want Greece out of the zone are playing their cards cleverly. Tsipras has created a situation where the banks closed and capital controls have been introduced before the referendum showing how Greeks will suffer from lack of a deal and no doubt encouraging a "Yes" vote.

Tsipras maintains that even if there is a "No" vote this will mean that he will have a stronger hand in dealing with creditors. This appears to indicate that he still would try again to negotiate a deal not exit from the eurozone. Nixon claims that the creditors would simply refuse to negotiate with Tsipras. That remains to be seen. The Greeks could always sideline him as they did with Varoufakis when his style appeared to be a hindrance to negotiations.

After months of promising to meet its debt obligations in full, today Tsipras said that he hoped the coming referendum on Sunday will reset bailout negotiations. He also presented new proposals that demand creditors forgive a third of Greek debt. IMF documents actually support the view that the present Greek debt load is unsustainable, but this latest proposal by Greece will no doubt be rejected. Tsipras seems to be flailing about without having any clear policy direction at all. If this is part of a strategy for a Grexit, it is badly planned and an insult to the Greek people since they have been constantly misled about what is happening, faced with conflicting statements from government officials and been kept in the dark about the planned Grexit. They have been told nothing about what a Grexit would involve. Whatever Tsipras and the Greek government planned the results are a disaster for the Greek economy and its people. Whether this results in a Grexit remains to be determined.

The latest polls show that Greeks are almost evenly split on the referendum issue. Here is the result of one of two polls quoted in the Wall Street Journal:The survey by polling institute Alco for the newspaper Ethnos found that 44.8% of respondents plan to vote “yes” in Sunday’s referendum, while 43.4% plan to vote “no.” One thousand people were surveyed between Jun 30 and July 1.This result is within the margin of error and there was a similar result in a second poll.

Divisions in Syriza party emerge over Greek bailout deal

While Greek Prime Minister Alexis Tsipras insists he wants a deal with Greece's creditors, many in the ruling Syriza party want the government to refuse to accept further demands and instead develop alternative plans in case there is no deal.

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There is increasing pressure on the Greek government to accept changes to pensions and wages that would represent crossing its former "red lines." It has already crossed the lines on the issues of privatization and taxes. However, Prime Minister Tsipras faces strong pressure within the Syriza party to refuse any further demands that would go against the anti-austerity policies for which the party campaigned and helped it win the last election.

The "Left Platform" within Syriza argued Greece should simply stop paying its loans if the "institutions," formerly the Troika" of the IMF, the European Central Bank and the European Commission, continue what they call the blackmailing of Greece by holding up release of loan funds until their demands are met. The group opposes further cuts to pensions and wages and also the changes to taxes and privatization that have already been agreed to by the government. A resolution by the "Left Platform" to simply default on debt payments and develop a plan for dealing with the consequences was defeated narrowly by a vote of 95 against to 75 in favor.

Even the final agreement for negotiating terms contains elements that creditors are quite unlikely to accept:The Central Committee agreed on a text saying any deal with creditors must involve no pension cuts, a small budget surplus before interest, increased public investment and a restructuring of Greece’s debt—terms that lenders are unlikely to accept. The text isn’t binding on Mr. Tsipras’s government but indicates how hard it will be to sell a deal to Syriza.

The leader of the Left Platform Panagiotis Lafazanis, the energy minister, said default was preferable to surrender even if this involved departure of Greece from the euro zone. Dimitris Keridis, an associate professor at an Athens university, said Syriza may be threatened more by independent members of the Syriza coalition who will not accept party discipline unlike the Left Platform members: “The biggest threat may not end up being Mr. Lafazanis, but other parliamentary members who lack party discipline, who are newly elected and are completely unpredictable.” But Parliamentarian Ioanna Gaitani, a Trotskyite member of the Left Platform argued that Greece could survive a debt default and that creditors showed no respect for Syriza’s mandate:“When faced with the pseudo-dilemma of ‘euro or national currency,’ the answer is a unilateral write-off of most of the debt, the taxation of large wealth, and the implementation of Syriza’s program. For the Left, the needs of the people are above profits and debts.”

If Tsipras reaches a deal that caves on all the Syriza red lines, the Left Platform could show solidarity within the group, rather than party discipline, by all the members rejecting the deal.

Greek Prime Minister claims that deal with creditors is close

Alexis Tsipras, the Greek Prime Minister, insists he is close to a deal with the country's creditors that would result in the remainder of the bailout loan funds to be dispersed helping to ease the country's cash shortage.

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This is not the first time Greek officials have said they are close to a deal. The same claim was made back on May 8. There are still key issues that are not resolved including pension and wage reforms, that is austerity measures. Tsipras claims that there is no possibility of retreat either on the wages issue or pensions. However, Greece has already caved on the issue of privatizations and tax reform another two issues that were previously said to be red lines. If there is to be a deal Tsipras would probably be required to yield on the pensions and wage issues as well. There will be virtually nothing left of the government's anti-austerity measures. Both the IMF and other EU creditors insist that the Greek reform proposals are still too vague. An EU official said that the Greek government needed to move beyong promising openings to final agreed upon wording and commitments.

EU leaders are holding a conference in Riga, Latvia, on May 21 and 22 to discuss eastern Europe. Tsipras will raise the bailout negotiations issue on the sidelines of that conference. The negotiations are now stretching beyond 100 days with little progress made until lately when Greece caved on key issues of taxation and privatization. Stephen Gallo, European head of currency strategy at the Bank of Montreal said in a TV interview: “Even if they have a deal before the bailout extension ends at the end of June, we don’t think they’ll get access to the full remaining 7.2 billion euros ($8.2 billion) of the current bailout extension.” He said the Greek crisis will not be over for a long time.

Meanwhile the Greek financial situation is getting worse as the government scrambles to raise 500 million euros in cash to pay for wages and pensions at the middle of the month. After raiding pension funds, and local governments the government is now asking that consulates and embassies cough up any cash reserves. The credit rating of government debt has plunged further into junk status. Greek banks have seen huge withdrawals of funds as nervous depositors worry that there may be a default and a return to the drachma. Money is flowing out of Greece as well. A leaked IMF document notes:“non-performing loans are at very high levels and – going forward – the system might suffer from important stress. The staff also noted a dramatic deterioration in the payment culture in the country”. This last refers to the near gridlock of the Greek system of inter-company payments as betwen €30 and €35bn has flowed out of the banking system – into the cash economy and abroad – since Syriza came to power.

Greece manages to scrape up funds for another payment to the IMF

The Greek government managed to scrape together enough cash to pay off $222 million that was due to the International Monetary Fund yesterday.

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To raise the cash, the government has been borrowing from pension funds and also from the reserves of local governments. The government is also placing a surcharge on withdrawals of cash and financial transactions. This surcharge will not only raise revenue but also discourage capital flight. Greece is also considering a special levy on the country's 500 richest families to collect more cash.

Next Tuesday, Greece faces an even larger payment of 770 million euros to the IMF. Greece also is required to pay salaries and pensions later next week. Greek officials have been talking with their creditors and EU officials to help push for a release of funds from their bailout loan, but so far creditors have insisted Greece must present and implement reforms that have been demanded as part of the original bail-out agreement. The reforms include changes to pensions and in the labor market that so far the government has refused to countenance and would go completely counter to their election pledges. Alexis Tsipras, the Greek Prime Minister, discussed with French President Francois Hollande how negotiations could be fast forwarded.

Greek officials are meeting with members of the Troika, the European Commission(EC), European Central Bank(ECB), and International Monetary Fund(IMF) or as they are now called "The Institutions" before a meeting of the Eurozone's 19 finance ministers next Monday at which the group could decide whether Greece has done enough to merit release of the remaining 7.2 billion euros of their bailout loan. In Brussels, technical talks had been extended beyond yesterday. An unidentified Eurozone official claimed that there had been visible progress after weeks of stalemate. The Greek Finance Minister Yanis Varoufakis was in Rome to discuss issues with the Italian Finance Minister, Pier Padoan and was then to talk with Spanish finance minister Luis de Guindos. Prime Minister Tsipras consulted with EC president Jean-Claude Juncker yesterday and they both affirmed that "constructive talks should continue."

Tsipras and Juncker issued a joint statement that seems to indicate that Greece may be reconsidering its opposition to demands for pension reform. The two spoke of the remaining reforms Greece needed to implement. These included modernizing the pension system "so that it is fair, fiscally sustainable, and effective in averting old-age poverty". The EC will no doubt stress the fiscally sustainable aspect aspect. The Troika have been demanding pension reforms that Greece has so far resisted. The other main issue was labor market reform and that also the two agreed must be addressed and they said they had discussed "the need for wage developments and labor market institutions to be supportive of job creation, competitiveness and social cohesion."

While the statements sound optimistic, there are reports members of the Governing Council of the ECB are growing impatient at Greece's reluctance to agree to and implement reforms demanded. They also worry about their exposure to Greek bank debt and are reluctant to bend the rules any further to help Greece out of its cash difficulties. German Finance Minister, Wolfgang Schaeuble, who has taken a hard line against Greece said that it was in Germany's interest to help Greece but not at any cost and that just giving more aid without changing the conditions under which Greece was operating made no sense. He also said that Greek demands for World War II reparations were nonsense. We should find out next week whether there is any breakthrough in negotiations. If there is a breakthrough, it would appear that is because Greece has basically caved in to the demands of the Troika.

Greece shuffles negotiating team with Varoufakis moving to the sidelines

Feisty Greek Finance Minister Yanis Varoufakis has reportedly been relegated to the sidelines in negotiations with EU and IMF creditors for a deal that would release more funds from the bailout loan.

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Varoufakis was unable to strike a deal at a recent meeting of the Eurogroup of finance ministers in Riga, Latvia. There was considerable criticism of his performance by some ministers. However, Greek Prime Minister, Alexis Tsipras, voiced support for Varoufakis and said that he would supervise a new team negotiating with the institutions responsible for the loan. At the same time, Deputy Foreign Minister Euclid Tsakalotos, another economist more acceptable to creditors, and soft-spoken, has been appointed coordinator of the group. A Reuters' article suggests this move pushes Varoufakis to the sidelines.

An article in the New York Times also suggests that although Varoufakis remains the leader of the negotiating team, that Tsakalotos would co-ordinate the day-to-day discussions of the group. Giorgos Houliarakis will lead the discussions at the technical level. He had already been involved in negotiations. Both Tsakalotos and Houliarakis are said to be closer to Tsipras than Varoufakis.

These moves are seen as an attempt by Tsipras to lessen tensions with creditors and create an atmosphere more conducive to a deal. There was even an interview with the new Greek president, Prokopis Pavlopoulos, with the German news source Spiegel Online who assured creditors that there was no possibility of a Grexit and who promised that loans would be paid back. However, other leaders including Varoufakis have also promised this continually. In spite of the fact that he is not from Syriza, the ruling coalition, but the conservative Nea Dimokratia party, his criticism of the austerity provisions of the loan echoed those of the ruling party. The international law professor supported Syriza objections to the creditors' criticism of minimum wages and other labour rights, noting that Germany guaranteed its citizens a minimum standard of living:"Some of the measures imposed on us go beyond EU law. We want to be equal members of Europe.We are not asking for anything more than for the Greek people to enjoy what Germany's Constitutional Court considers as an established social right for the German people."He also claimed that parts of the austerity program demanded measures that would stunt Greece's growth , making it even more difficult to pay its debt. According to a Guardian article insiders say that Varoufakis still has a lot of say in negotiations.

The new team appears to be using the same narrative as the old team and Varoufakis. So far the creditors have not been willing to yield at all to any anti-austerity demands. Cosmetic changes of this sort and a change in tone are hardly likely to produce a deal. Perhaps it is the other side that needs a change in tone and in players. While Varoufakis has been abrasive, the other side is adamant that it will continue to impose austerity conditions that it must know the Greek government cannot accept. So unyielding have the creditors been, that analysts are beginning to speculate that the aim is to destroy the Syriza government and produce regime change or alternatively force Greece out of the eurozone.

Greece denies that it is making plans to default on debt payments

As has happened often during negotiations with its creditors, mixed and contradictory messages are coming from the Greek Syriza government.

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The Financial Post reports that the Greek government is preparing to default on its debt if it can't reach a deal with the Eurogroup creditors by the end of this month. One government official claimed:“We have come to the end of the road . . . If the Europeans won’t release bailout cash, there is no alternative [to a default].” There are 2.5 billion euros of payments due to the International Monetary Fund in May and June. The government may be using the threat of default as leverage to receive a better deal from creditors but there is little sign that it is working.

Negotiators for the creditors appear to be exasperated by the Greek government's lack of movement towards presenting and implementing a set of acceptable reforms. There is no sign that any funds from the extended bailout loan will be released until that happens. European Commission Vice President Valdis Dombrovskis said that the mood between the Greek government and negotiators had been tense:"Talks are very complicated. Time is running out. Greece should come up with an ambitious reform list in line with its bailout program and also start to implement it."The Euro Working Group of deputy finance ministers gave the Greek government a deadline of six working days to present a revised economic reform plan. The next meeting of the eurozone finance minister is set for April 24. Dombrovskis claimed that the finance ministers had done their best to be flexible but Greece had to do more.

Whether the Greek negotiators are using the threat of default as a negotiating tactic or not, the depletion of Greek government coffers and the need for more cash is a reality as payment of pensions and salaries become due as well as loan payments. Investors are unsure whether there will be a forced exit of Greece from the eurozone or even perhaps an election called again if no agreement is reached.

Syriza has not only passed legislation on poverty and home foreclosures condemned by its creditors but also has steadfastly refused to address what the Financial Times calls "politically sensitive structural economic reforms":

These included an overhaul of the pension system, including cuts in the payments received by Greek pensioners, and measures to permit mass dismissals by private sector employers.

In spite of promising to meet Greece's international debt obligations, the finance minister Yanis Varoufakis said that the government's top priority is its domestic commitments and this included an obligation to continue paying pensions. Surely, it should be evident by now that Greece cannot do what its creditors demand while also meeting its "domestic commitments."

Nevertheless a Greek government spokesperson denies that it is preparing a default if it cannot reach an agreement with creditors on bailout terms or that it might call an early election afterwards. The spokesperson said that negotiations were proceeding swiftly towards a solution. A solution is needed since the Greek government needs 2.4 billion euros to pay salaries and pensions this month. On the first of May it needs to pay the IMF 203 million euros and another 770 million euros on May 12. Greek prime minister Alexis Tsipras maintains that Greece will simply be unable to service its debt without funds from the European Union.

Greece made payment to IMF on time but cash shortage remains

The Managing Director of the International Monetary Fund(IMF), Christine Lagarde, has confirmed that the Greek government made a 459 million euro payment due on April 9.

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Lagarde was confirming a statement by a source in the Greek finance ministry that the payment had been ordered. The crucial payment will help Greece move closer to receiving more funds from an extended bailout loan that will help Greece stay in the euro zone. The Greek government had threatened not to make the payment on time if it would not be able to pay pensions and a government payroll a few days later. Greece will still need to make interest payments of 400 million euros and roll over 2.4 billion euros in short-term treasury bills on April 14 and 17. Even yesterday, Greece issued 1.14 billion euros in six month term treasury bills. The Greek unemployment rate declined marginally in January to 25.7 percent in January versus 25.9 percent the previous month. After a long recession, the Greek economy grew 0.7 percent last year.

In his recent meeting with Russian president Vladimir Putin, Greek Prime Minister Alexis Tsipras did not request any economic aid. Putin suggested Russia might provide credits for large scale joint projects in the future. He said:"The Greek side has not addressed us with any requests for aid, We discussed cooperation in various sectors of the economy, including the possibility of developing major energy projects."

The recent list of reforms presented by the Greek government to its creditors is not regarded as enough by Greece's creditors. Euro zone deputy finance ministers have given Greece six working days to come up with revised reform proposals in order to allow a deal to be reached on April 24 at a Eurogroup meeting in Riga, Latvia. The earlier reform list was regarded as too optimistic about revenue projection and did not deal adequately with pensions and labor market reform. On these latter issues the Eurogroup demands are at odds with the promises of Syriza during their election campaign.

While the IMF payment may provide a short term sense of relief, Greece's top banks including the National Bank of Greece are bracing for a continuing battle as more payments become due. Reports indicate that a default and Grexit or exit from the euro zone, could create even more hardships for the Greeks and problems for the Greek economy. Even if Greece does get the remainder of the funds in this bailout extension after the meeting on April 24, within two months it will need more funds to cover its debt. The Greek government says it does not want another bailout but it is not clear how this can be avoided.

Greece still has no deal with its EU creditors

On Tuesday negotiations between Greece and international lenders ended with no deal reached on reforms that would allow the release of more bailout funds.

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Greece must reach a deal with international institutions, formerly known as the Troika of the European Commission, International Monetary Fund(IMF), and the European Central Bank(ECB), before it can receive the next instalment of bailout funds. Technical talks have halted for now but could begin again next week. Greece could be unable to make debt payments in April if it does not receive more cash.

Greek creditors said that the package of reforms submitted by Greece were ideas rather than a concrete plan of reform. Greek representatives had been meeting with what are called the "Brussels Group" of representatives from both the European Union and the IMF. Creditors are intensifying efforts to collect data in Athens. On Monday, prime minister Alexis Tsipras had appealed for an "honest compromise" with his creditors but warned it could not be won at any cost. He stressed that the government had "red lines" such as avoiding wage and pension cuts, mass layoffs, and a fire sale of state assets.

Spokesperson for the European Commission, Mina Andreeva, told reporters: " The constructive talks are ongoing since Friday, but we are not there yet, so this is why the talks should continue. The Eurogroup working group will discuss the matter at its next meeting,The talks are constructive and are ongoing,"There was to be a conference call of the Eurogroup working group on Wednesday that would provide an opportunity to appraise the debate so far.

The Financial Times reported on the new list of economic reforms that Greece sent to the euro zone authorities on Wednesday. The document was 26 pages long. The reform measures are estimated to generate about 6 billion euros this year. Greece is attempting to unlock 7.2 billion euros in bailout funds. Many of the reforms tackle tax evasion a continuing problem in Greece. There is also a new lottery scheme. In a short introduction the document states: “The larger purpose of this document is, in the first instance, to unlock short-term financing that will permit the Greek government to meet its immediate obligations. The Hellenic Republic considers itself to be a proud and indefeasible member of the European Union and an irrevocable member of the eurozone.”In spite of the lack of a deal so far, the atmosphere of the talks appears improved. Even so, several EU officials said they did not expect a deal until the next meeting of the eurozone finance ministers on April 24. Greece claims it has the necessary funds to make a payment of 450 million euros to the IMF on April 9.

The new list of reforms fails to address an overhaul of the Greek pension system and greater labour market liberalisation. The new reforms even suggest 1.1 billion euros in new spending, partly on pensions. The document also suggests a suspension of the "zero deficit clause" since this would force more cuts to state pensions. These measures are not likely acceptable to creditors.

The reforms in the labour market include a gradual increase in the minimum wage and the strengthening of collective bargaining laws. These measures point in the opposite direction of policies already adopted in earlier reforms. On privatisations the document appears to grant concessions even though this conflicts with the express statements of some Syriza ministers. However, the document does estimate that privatizations would bring in 1.5 billion euros this year as against the planned 2.2 billion in the original agreement.

Economy minister George Stathakis said he expects a deal next week. The reform list presented on Wednesday, included the leasing of 14 regional airports and the privatization of the largest port Piraeus to raise 1.5 billion euros through asset sales and leases. Yet, Stathakis said the government had no plans to sell all of its 67 percent stake in the Piraeus Port Authority. He claimed that government would pursue a joint venture. There seem to be inconsistent statements given by different officials. It seems unlikely that the Greek government will be able to pursue any substantial reforms and reduction in austerity as promised to voters during the election campaign and at the same time satisfy its creditors and obtain the release of more bailout funds. Even Warren Buffet thinks that it might not be such a bad thing if Greece left the euro zone.

Greece receives over $2 billion from European Commission to avoid cash crunch

Head of the European Commission(EC), Jean-Claude Juncker says that 2 billion euros($2.15 billion) in unused funds will be made available to help Greece avoid a looming cash crunch.

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The offer of the funds, comes just a day after talks between Greek Prime Minister Alexis Tsipras and European leaders in Brussels dealing with Greece's compliance with the terms of the extended bailout loan. The leaders, including German Chancellor Angela Merkel said that Greece has agreed to draft a new reform plan that would allow it to receive further funds as part of the loan. Tsipras said that he was now "more optimistic" subsequent to the talks. Greek authorities also claimed that they were gradually coming closer to meeting the requirements of the loan extension.

The Troika of creditors, the European Commission, European Central Bank, and International Monetary Fund now rebranded at the insistence of Greece as "the institutions", agreed they would extend the current bailout program until June of this year. However, there have been constant conflicts between Greek's creditors and the Greek government.The Syriza government has been passing humanitarian legislation that will help the poorest Greek households with free food and electricity and will also allow taxes that are in arrears to be paid by instalments. The European Commission has in effect vetoed such legislation on the grounds that it was introduced without consultation and violated the terms of the loan extension. The creditors demand reforms in the economy including cutting government expenditures and continuing with privatizations

Since the two bailouts in 2010 and 2014, and the implementation of austerity conditions, the Greek GDP has shrunk by 25 per cent. One third of Greeks now live below the poverty line. Unemployment is around 30 percent but half the young people are unemployed. Gaining access to this new money is a victory of sorts for the Greek government.

Juncker, the EC president, said that the new funds will not be tied to the existing bailout loan. but can be used as aid for people and companies hardest hit by the debt crisis. This sounds very much as if even the EC recognizes the need behind the very legislation it had just vetoed. No doubt, Juncker hopes that this move will.make it easier for the Greek government to propose reforms that will meet the approval of creditors as Greece has pledged to do. Since these funds are not tied to the bailout, they can be used for purposes that might run counter to the conditions for the bailout funds. Greek Prime Minister Tsipras praised the decisionsaying:"It is a good sign. It was recognized that there is a humanitarian crisis in our country and that there must be a common effort against it — because it was the not the result of some natural catastrophe."

The EU creditors have been complaining that Greece is not cooperating with technical staff who are trying to monitor Greece's compliance with the bailout terms. The IMF calls Greece the least cooperative client they have ever had. EU leaders have told Tsipras that within the next few days he must come up with detailed budget cuts, and also tax increases, and other reforms before any more bailout money will be released. Tsipras refused to specify a date for delivery of the reforms. What is happening may be another case of kicking the can down the road only to face the same issues within a short time. For now, however, Tsipras seems finally to have gained more breathing space and some recognition of the political problems he faces in Greece.