Greek Financial Crisis:

The Archives

June 28th, 2015

8:12 am GMT

Corinne Candilis:

With Prime Minister Tsipras in the midst of negotiations with the Troika, Greece has lost its faith in the EU and its government to reach a consensus. The ATM's in Greece are running out of cash. Here three read "does not have money". The suffering in this country is real and it's tangible. The problems in the Greek banks and government were created by the politicians. The citizens are the victims, not Germany. One of these signs has scribbled under it, "but we have pride". Because they know they should not be suffering the crippling effects of austerity as punishment for crimes they did not commit.


10:40 pm GMT

Things are not looking too hot in Greece right now. The banks will not open this week at all, and the most anyone in the country can withdraw per day from an ATM is €60. The Euro itself has already dropped to 1.10 and is expected to keep dropping. There's basically no chance of any bailout deal at this point, austerity or no, and Greece will not be able to make its payments on Wednesday. A default is inevitable, and people are scared. Over €1 billion were withdrawn on Saturday alone from ATMs around the country, and every ATM I've seen in Syntagma Square is empty.

But as Nick Larigakis, President of the American Hellenic Institute, said, "The Acropolis has watched over Athens for thousands of years, through war, genocide, occupation, coups d'état, everything you can imagine. And you're telling me a financial crisis is going to destroy Greece? It's not going anywhere. It's not getting wiped off the map."

Greece has seen worse. This, too, shall pass.

June 30th, 2015

11:39 pm GMT

As of an hour and a half ago, (5 pm EST) Greece's second bailout deal expired. This does not mean Greece has technically defaulted - yet. Their loans are considered to be "in arrears" until Christine Lagarde, IMF Chief, tells the IMF board of directors to classify it as a default, meaning there is still time for a deal to be passed. On July 5th, the Greek public will vote in a (questionably constitutional (it is unconstitutional to conduct referenda on fiscal policies in Greece)) referendum on a version of a new deal with the EU.

Saying NO means they reject the deal and almost certainly means a Grexit from the Euro, and, in my opinion, from the EU eventually. YES means that the IMF and EU will help Greece with its debt with the usual demand of reforms and continued austerity. Many will be tempted to vote no, and purely economically, that is the answer. However, the political and social consequences of leaving the Eurozone and possibly the EU, are in my opinion, too high.

Early polls indicate up to 57% of Greeks will say yes, while more conservative estimates say 47% will say yes while 33% will say no. To my family and friends in Greece, I urge you not to be tempted by the hot-headed rhetoric and anti-EU sentiment that would have you vote no.

July 1st, 2015

11:38 am GMT

Tsipras and the Greek government have capitulated and decided to take an EU deal. Still remains to be seen if EU is still interested.

3:36 pm GMT

Today I met with President of the Hellenic Republic Prokopis Pavlopoulos. His words were quite encouraging. He spoke to us in Greek, saying "Greece has always been, is, and will always be a part of Europe. There can be no Greece without Europe, but also no Europe without Greece."

He went on to say that he could not, in his capacity as president, explicitly give support to one side or another, but told us he thought we were smart enough to figure out which way he would go.

Many young people that I've spoken to say they will vote no to the referendum as a sign of revolution against the EU. I asked President Pavlopoulos what words he had to offer to the youth of Greece. He said the question of the referendum, no matter what, is one of a Greece that is part of Europe. Greece is truly European, and must remain so.

However, none of this may be necessary. This morning, PM Tsipras capitulated to the EU, conceding many points on which he had previously held out. Just before news of this was released, Pavlopoulos said that should Tsipras strike a deal, he would redact his signature on the referendum bill. It may not happen after all.

That is, if the EU will take Greece back.

3:43 pm GMT

Seems as though Merkel was not having it, and refuses to negotiate until after the referendum. Tsipras insists that the referendum will go on, and I doubt Pavlopoulos will try and go over his head.

July 3rd, 2015

2:50 pm GMT

"There is fundamental value to Europe in having Greece as part of its orbit; and equally Greeks should see the value in being part of the transatlantic world. There are big strategic stakes at play, and there is more to the business of the bailout than just business."

This is literally everything I want in a foreign policy article right now. Thank God for James Stavridis. Extremely relevant. I have been urging people all week to consider the geostrategic implications of a Grexit. To all my family and friends in Greece: a no doesn't necessarily mean a Grexit, but it's the only answer that could lead to one, and I cannot stress enough how bad that would be.

July 4th, 2015

12:59 pm GMT

Capital controls in Greece for the past week have limited withdrawals to 60 euros per card per day. What, though, are the implications of this realistically? Everyone withdraws the maximum amount, and ATMs don't carry bills smaller than 20, so you get three 20s. The result? A lack of twenties.

Today while I was in line with my cousin and his girlfriend, the ATM ran out of twenties, effectively reducing the cap to 50 euros per day. If people aren't then spending that money, all people will have are 50s, and then nobody will be able to make change. This could easily become a problem and strangle small transactions, which are basically the entirety of what's going down right now in Greece.

11:18 pm GMT

That moment when you read the IMF's Debt Sustainability Analysis for Greece (basically a report on Greece's ability to pay off its debt) and you read the following on proceeds from privatization of government assets:

" The fourth SBA review in July 2011 projected €50 billion to materialize through end–2015. Actual receipts through the first quarter of 2015 were €3.2 billion, about 94 percent below the target. "


July 5th, 2015

10:11 am GMT

Although technically, the question today is whether or not Greeks approve of a deal with the EU that is no longer on the table, many have cast it as a decision of whether or not to stay on the Euro or even in the EU. It's a dangerously false dichotomy, and those who vote "Oxi" with the idea that leaving is a good thing are doing themselves a disservice.

11:08 am GMT

Top Ten Reasons Why Today's Greek Referendum is Bullshit:

1. It breaks the number one rule of public referenda – have a clearly formulated question.
2. It is unconstitutional – the Greek constitution forbids public referenda on economic policy.
3. It gives the Greek people ten days to decide on an issue that could affect the country for generations (by contrast, Scotland had 18 months to decide whether it wanted independence).
4. It asks whether Greeks support an outdated deal that was replaced with a more favorable one, pushing Greeks towards a no.
5. There is currently no deal on the table at all, as both versions have now expired.
6. The majority of Greeks have not read the deal about which the referendum is asking.
7. There is no consensus about whether the referendum is a question of Greece leaving the Euro or not.
8. Greeks must vote where they are registered, meaning many will not vote at all because they cannot travel home in time.
9. Even with absentee ballots, one would have had to act almost immediately, giving one even less time to decide.
10. As is often the case with such referenda, it has become a question of emotion rather than logic, asking Greeks to decide on their fate while avoiding the substantive issue, and becoming prey to scare tactics and dramatization.

6:23 pm GMT

As the ballots are counted, No pulls ahead, 60.1 to 39.9 after about 10% of votes have been tabulated, according to Mega TV. Participation is hovering between 50 and 60%, depending on region. Long night ahead, but there is still time. 

6:35 pm GMT

After 18.2% has been counted, Oxi leads with 60.3% to 39.7% for Nai across the country, according to Mega TV. 

6:51 pm GMT

As the percent of votes counted climbs, the ratio remains constant around 60-40, and the president of SingularLogic, an exit poll company, has said it will be 61%//39% in favor of Oxi/No.

It's time to stop wondering what the result will be and start planning for what will happen next. Here's hoping that Tsipras and Varoufakis weren't just full of bluster and hot air, and that Oxi really does mean a stronger basis for negotiations for Greece. 

11:17 pm GMT

I went to Syntagma Square tonight, where supporters of the Oxi/No vote were out celebrating in full force. Their spirits were not tempered by the march of Communist supporters, some of whom rejected the referendum as choosing between two evils; or by the violence perpetrated against police by anarchists just a few miles away; or by the enormous lines of people at ATMs I saw on the way home who were hoping to withdraw at midnight before the markets open tomorrow, trying to preempt a Grexit and get their last 50 Euros.

This does not have to be a bad thing for Greece. But if Tsipras keeps up his track record of wasting perfectly good opportunities, Greece could be in for a very tough time. We might want to hold off on the ouzo shots for now, or risk a very painful hangover.

Video and pictures to follow.

July 6th, 2015

11:27 am GMT

Last night, after the vote came out as Oxi/No, two people resigned: New Democracy leader Antonis Samaras, and Finance Minister Yanis Varoufakis. Samaras and Tsipras had a terrible relationship, and his departure means all the political leaders of Greece can now work together to create a cohesive and consistent Greek stance, which is what's happening this morning as the leaders of every political party in Greece meet at the home of President Pavlopoulos. They will make a statement later today.

Varoufakis, upon stepping down, said that he hoped to make Tsipras's life easier by allowing someone to step up who had not come to an impasse with the Europeans. He simultaneously called for the resignation of Djisselbloem, the president of the Eurogroup, saying that both of them had failed, and they should let others try instead.

Regardless of whether you agree with the result of the vote, Greece and its supporters must stand together. It's time to save Greece.

8:27 pm GMT

Today, the new Greek Finance Minister, Euclid Tsakalotos, and Tsipras headed to Brussels for a Eurozone summit with the heads of the Eurogroup, ECB, and the European Commission to try and work out a solution to the crisis once and for all. Donald Tusk, president of the European Council and chair of the summit, expressed that he wanted a decision on whether Greece could receive bailout funds at all by tonight. Those who hoped for an end to the Greek tragedy, though, were sorely disappointed, as Tsakalotos showed up without a proposal. However, there seems to be some good will for a new start, and the mood in the room was significantly improved from the tense negotiations that took place under Varoufakis's watch.

There is currently really only one path forward if Greece is to stay in the Eurozone: emergency funds through the European Stability Mechanism (ESM). Previous Greek bailouts had come through the European Financial Stability Fund (EFSF), but this was a temporary mechanism, and it expired on June 30th along with the last Greek deal. Now, the only mechanism left is the ESM. The good news is the ESM has the funds to prevent Greece from defaulting on its July 20th payment to the ECB (€3.5 bil) because of the interest it received from the previous Greek bailout (basically bailing out Greece with money it made from bailing out Greece). The upside? The ESM doesn't require slow parliamentary procedures. The downside? It requires a unanimous vote from Eurozone members, and the German finance ministry has been signaling it wants its piece of the ESM pie back.

Tsipras is currently in an emergency summit session laying out a plan for a short-term relief plan followed by a long-term plan. There is speculation that another summit will be called for Sunday.

Obama called Merkel today and urged her to keep Greece in the Eurozone. Merkel said today that this is a matter of days, not weeks, in which a deal must be made. However, press passes for the summit, usually issued a day at a time, have an open-ended validity through July, signaling that this could take a while.

In the meantime, the Greek people will have to hold out. The soonest cash could get to Greece is mid-August.

July 8th, 2015

7:52 am GMT

As Merkel implied yesterday, time is indeed running out for Greece. Juncker (European Commission President) and Tusk (European Council President) gave a joint press conference in which they laid out the timeline of events. Greece is expected to give a proposal for "credible reforms" in return for emergency assistance from the ESM.

Tusk, who has been reluctant to announce any hard deadlines, put his foot down and announced that Thursday was the deadline, with 8:30 am on Friday being the very latest a proposal could be submitted. Tusk, though, sees this problem as having come from mistakes "on all sides of the negotiations."

All 28 European heads of state will meet at a summit on Sunday, hopefully to discuss these new proposals. I say hopefully because the alternative is a Grexit, something for which the European Council and Eurozone apparently have a "detailed" plan, according to Juncker, something Tusk sees as "the worst case scenario."

Greek TV has been calling the crisis "Greece Hour Zero" for the past couple weeks. This is it. At 8:29 am on Friday, July 10, it will be hour zero. Let's hope Tsakalotos and Tsipras can get it together.

July 9th, 2015

9:41 am GMT

End clientelism, downsize the public sector, reform the public banking sector and privatize, open markets to professions that are currently prohibited to produce jobs, and end privileges for the military, the islands, and the Greek Orthodox Church. These are the 5 reforms that Guy Verhofstadt, leader of the Alliance of Liberals and Democrats for Europe, demanded of Mr. Tsipras yesterday during a speech. Tsipras must produce a clear "roadmap" to "credible" reforms with start and end dates, and put legislation on the table. And it has to happen today. Time is all but up.

Meanwhile, on the Greek island of Paros, I've spoken to restaurant and bar owners, waiters, and shop owners. The mood is one of exasperation and hope for a deal. Almost everybody I've spoken to voted no or implied that they had, but wanted a deal with the EU. Business is suffering, they say, but is still going. People are afraid to come to Greece, they say.

I went to a beach that I had visited before, which had been full of people and that today was nearly empty. If Greece leaves the EU, it will get much, much worse 

11:12 pm GMT

Time for a small sigh of relief – Tsipras sent in signed copies of a reform package to Jeroen Dijsselbloem, the head of the Eurogroup, along with the rest of the European institutions. Tomorrow, Friday July 10th, the package will be debated and voted on in Greek parliament. Given the mechanisms for how these votes go down, it is likely to pass, but some very significant voices, both in Syriza and without, have already pushed back against the bill, including about a third of Syriza itself. However, even if passed, the bill would not become law until it is approved by the creditors as well. Let's hope Greece decides not to shoot itself in the foot.

There are three obstacles left: approval by Greek parliament, approval by the European institutions, and approval by European Parliament. On Sunday, all 28 heads of state of Europe will meet to debate the bill. We've never been closer to a Grexit, but we've also never been closer to a solution. Let's get it done.

July 10th, 2015

12:18 am GMT

If you want to know why it's so difficult to get a Greek bailout plan done, check out this flowchart explaining the structure of the EU.

EU struct.jpg

July 12th, 2015

3:48 pm GMT

The EU summit of all 28 heads of state that was scheduled for today, July 12, has been cancelled in favor of continued Eurozone talks (involving just the 19 countries on the euro). Apparently Germany has circulated plans for a "temporary Grexit" as talks have gotten more difficult, but France's President, Francois Hollande has rejected this idea, saying that "It's not just Greece. [What's at stake is] the concept of Europe."

Meanwhile, the finance ministers of Finland and Slovakia say there is little chance of a deal, despite Juncker's claim that he will fight for a deal until the last minute. More to come.

July 13th, 2015

3:58 pm GMT

A deal has been reached, and a dramatically larger sigh of relief is in order. After you're done sighing, take a look at the agreement and its conditions. It's not everything we hoped for.

First, the basically whole deal is technically still tentative, ie there's still time to screw this up. Greece has to implement four conditions by Wednesday, July 15th in order to get any real further relief. Tsipras released a statement on his website stating that they had achieved a debt restructuring and 86 billion euros in bailout funds. If you read the text of the 7-page statement released by the Eurogroup, though, it says that after the conditions set for Wednesday have been implemented, a restructuring will be discussed, and that the Eurogroup "recognizes the need for 82 to 86 billion euros" of financing. Not exactly as concrete as one might like.

On the bright side, the German plan for a "temporary Grexit" (basically a time-out, but for adults who run countries) has been completely rejected and taken off the table. When asked if she agreed with a comparison of the deal to crippling war reparations heaped upon Germany in 1919, Merkel responded "I never make historical comparisons."

Italy and France were apparently Greece's two greatest allies, trying to soften the deal, while Finland and Germany insisted on harsher terms.

So what are these terms? By Wednesday, Greece has to streamline VAT and broaden the tax base; enact pension reform to make it sustainable; ensure the legal independence of the state statistics organization; and put in automatic spending cuts (austerity) if the budget surplus falls short of the goals set out for Greece.

After this goes into effect, they can begin to negotiate a Memorandum of Understanding, which could include a debt restructuring.

There's still quite a few opportunities to screw this up, but we're over the hump. Greece, for the time being, will remain in Europe.

July 15th, 2015

4:32 pm GMT

Today, the Greek parliament votes on the conditional legislation set out in the deal made this past Sunday.

According to Reuters, "[Tsipras] must pass legislation to cut pensions, increase value added tax, clamp down on collective bargaining agreements and put in place quasi-automatic spending constraints. In addition, he must set 50 billion euros of public sector assets aside to be sold off under the supervision of foreign lenders and get the whole package through parliament by Wednesday."

The issue is that a large portion of Syriza is revolting, saying they will not renege on the election promises that got them elected. The deal is expected to pass, since pro-European opposition groups will vote in favor, but Syriza could splinter, possibly causing another round of snap elections, spelling the end for Tsipras' government.

The real threat of that happening, besides political turmoil at a time when stability is needed most, is that a new government could go back on the deal and throw away everything that has been achieved in the last couple weeks.

As usual, time will tell.

July 16th, 2015

4:35 am GMT

Things continue to go well in the realm of the Greek bailout, as this evening (early morning in Greece, after an all night session) the Greek parliament voted to approve the conditions set out in the deal Tsipras signed with the Troika on Sunday.

Although the vote passed 229 votes to a mere 64 in opposition, a large portion of that opposition came from within Tsipras' own party, Syriza. Confused? Syriza came to office on promises to end austerity, and the deal signed on Sunday did just the opposite. Around 40 members of Syriza indicated they would not renege on their promises. Notable parliamentarians that voted against the bill include ex-finance minister Yanis Varoufakis, speaker of the parliament Zoe Konstantopoulou, and energy minister Panagiotis Lafazanis.

Lafazanis indicated that he supports Tsipras, but not the bill he has put forth, and that he would resign at Tsipras' request. This is good for Tsipras and the stability of Greek government. Had Syriza pulled its support and actively opposed Tsipras, things could be much worse. The government would be destabilized, snap elections could occur (again) and the new government might reject the deal entirely, bringing a Grexit back to the table.

The way the Greek government works, the prime minister needs the active support of at least 121 parliamentarians in order to maintain a "political mandate". Without that support, snap elections occur to bring forth somebody with the support. As of tonight, Tsipras has only 124, as members of Syriza have pulled their support. Tsipras will have to make deals to create a unity government (a government run by more than one political party that have bonded together to get the necessary votes) in order to maintain power. It is also expected that Tsipras will reshuffle his cabinet and eject any dissenters in order to move forward with a unified government.

The bright side? The deal has been passed in the European institutions and Greek government. Bridge financing can happen now to save Greece in the short term, and the big bailout can be discussed. On Friday, German parliament will vote on the deal. Let's see how that goes.

August 20th, 2015

5:51 pm GMT

You thought the Greek crisis was over? Not quite. It's been a while, but it's time for an update. Since July 20, Greece and its Eurozone partners have been negotiating the exact terms of the bailout deal that was tentatively approved in July. After a series of marathon talks and all-nighters (not just for college students, apparently) an 86 billion euro deal was struck between Tsipras and the Eurozone. However, in order to go into effect, it needed to be approved by both Greek and German parliaments, as well as a few others – and as of yesterday, it was, prompting European Commission President Jean-Claude Juncker to say "Greece is and will irreversibly remain a member of the Euro area."

Yesterday, the German parliament passed it in a landslide vote of 454 to 113, with 18 abstentions, just in time for Greece to make its payment on August 20.

However, the more interesting piece of this was the Greek side of the ratification. Last week, the Greek parliament voted on the deal, passing it easily with 222 votes in favor, 64 against, and 11 abstaining. However, the crucial piece hidden in the numbers is that most of this opposition came from within Tsipras' party, Syriza. Out of the 64 votes against, 40 came from Syriza. The left wing of Syriza sees the deal as a betrayal of their campaign promises to reject austerity, and the leader of this opposition, Panagiotis Lafazanis, said "I am not going to support the prime minister any more."

This puts Tsipras in a tough spot – in order to maintain power, the Greek PM must have at least 120 members of parliament actively supporting them, and with the loss of Lafazanis and his ilk, Tsipras no longer meets that minimum.

Usually, this would call for a confidence vote, but Tsipras, still enormously popular among Greeks, has forgone this step and instead chosen to resign, forcing snap elections again just 7 months after the same snap elections that brought him to office. Since Tsipras gets to choose the order in which MPs are listed on the ballot, he has the advantage of swaying who stays and who goes, and many are suggesting that this is a move to purge the parliament of dissenters who opposed the bailout deal.

Snap elections are expected to take place on September 20.