Greece negotiations : Brinkmanship, Bluff and Blame Games ..... all going well, then ?

Monday 1st June 2015

 
Greece negotiations : Brinkmanship, Bluff and Blame Games ..... all going well, then ?

 

"Greek deal prospects recede as Tsipras attacks creditors' "absurd" demands", The Financial Times, p.1

OK, so where are we at right now ? Theoretically the deadline for agreeing terms for the extension of Greece's bail-out deal expired over the weekend, though the talks continue. Greece is due to repay 1.2b euros to the IMF over the next 2 weeks, starting with 300m euros on Friday, She also has an eye-watering schedule of payments to make later in the month (including 3.5b in maturing bonds) and into July, but frankly since things may not get that far we won't list them now. We can signal upcoming commitments at a later stage if and when we get there. Doubts over the likelihood of Greece making these payments has prompted further large cash withdrawals from Greek banks, which in turn raises the possibility of a bank run.

Last week Greek PM Alexis Tsipras was making some pretty optimistic noises on the chances of reaching an agreement with creditors over the reforms required to release the 7.2b euros in further aid that would seem essential to avoid default. However in yet another remarkable twist in this saga Mr Tsipras chose to use an article in Le Monde over the weekend to accuse creditors of making absurd demands and of being motivated by a desire to punish Greece rather than any determination to find a constructive agreement. He even suggested that they re-read Hemingway's "For Whom the Bell Tolls" , a not very subtle warning that the arrogant (i.e. the creditors) will have most to lose when it all kicks off. Really, this is incredible stuff (even if the original quote is from John Donne).

It would not be overly cynical to speculate that Mr Tsipras' earlier suggestions that things were going better and that Greece had made large and difficult compromises were designed to lay the blame firmly at the creditors door if and when the balloon goes up. Are we any nearer to a deal ? EU political leaders do from time to time remind us of the importance of keeping Greece within the fold but do not seem to be influencing the more hawkish moneymen. Friday will be an important day for sure, but since within the arcane workings of the IMF there is in theory a mechanism that might allow all payments for the month to be rolled into one payment at the end, it need not be definitive. We'll have to watch on with morbid fascination as the game unfolds.  Sadly however, this is anything but a mere intellectual exercise.