Tsipras seeking mercy from Merkel

March 23, 2015

Greece's PM Tsipras, EU Parliament President Schulz and Germany's Chancellor Merkel attend a EU leaders summit in Brussels

Greek Prime Minister Alexis Tsipras meets Angela Merkel in Berlin late today.

The strategy in Athens seems to be to seek mercy from EU leaders, going over the heads of euro zone finance ministers and the European Central Bank and IMF, hoping that they will see the broad political cost of a Greek collapse rather than focus on the nitty gritty of funding and required economic reforms.
That doesn’t look like a winning strategy.

After an EU summit in Brussels, Tsipras promised to present a full set of economic reforms in order to unlock cash to stave off bankruptcy. Since striking a deal last month to extend Greece’s bailout for four months, both sides have talked past each other and little has been done in Athens to meet its side of the bargain.

The message from EU leaders was clear – no reforms, no money – and the risk of a further standoff which could push Greece close to the euro zone exit was plain to see in the differing accounts given by Tsipras and Merkel.

Tsipras said it was agreed that Greece did not have to pursue “recessionary measures” while Merkel said the Feb. 20 agreement must be met in full. The Greek premier hoped the ECB would drop its refusal to allow issuance of more short-term debt but there is no sign of that happening.

The Financial Times has reported a letter from Tsipras to Merkel, sent a few days before the summit, which said it will be impossible to service debt obligations if the European Union does not give his country any short-term financial assistance.

Officials say Greece has enough money to get through April but no more. Deposit outflows from banks are spiking again.

Having said all that, there were signs of movement at the summit. The European Commission offered 2 billion euros from the EU budget to help alleviate the humanitarian impact of five years of harsh austerity and there may be some softening by the euro zone on an insistence that the required reforms must be put in place before any money flows.

Despite all the events of the past two months, there may still be things taken on trust as long as Athens’ list of proposals stacks up and the numbers add up. Measures could be substituted from the existing list as long as they had the same fiscal impact, Merkel said.

ECB President Mario Draghi addresses a European Parliament committee for a couple of hours where Greece, QE and a lot more will be on the agenda.

After Benjamin Netanyahu defied the odds to win re-election, the Israeli central bank is expected to hold rates at an all-time low 0.1 percent having cut by 15 basis points last month.

Israeli President Reuven Rivlin is meeting party leaders for consultations before his expected naming of election winner Netanyahu to form a new governing coalition.

Netanyahu has vehemently opposed any deal with Iran. President Barack Obama said the Israeli leader’s pre-election disavowal of a two-state solution to the Israeli-Palestinian conflict makes it “hard to find a path” toward serious negotiations to resolve the issue.

Top Israeli envoys were sent to confer with France on Sunday about preventing a nuclear deal with Iran. France has demanded more stringent restrictions than other Western delegations during talks with Iran but one French diplomat played down Israel’s sway in Paris, saying Netanyahu had overplayed his hand in a March 3 speech to the U.S. Congress.

U.S. Secretary of State John Kerry said on Saturday talks had made genuine progress and the time had come to make hard decisions in reaching a deal to curb Tehran’s nuclear programme by an end-March deadline for a framework deal.

Iranian President Hassan Rouhani was quoted by state news agency IRNA as saying there was “nothing that cannot be resolved” but Supreme Leader Ayatollah Ali Khamenei, who will have the final word, denounced U.S. “bullying” and repeated Tehran’s denial that it was seeking to develop a nuclear weapon.

Elections in the Spanish region of Andalucia on Sunday suggested, as elsewhere in Europe, that the traditional political landscape is fracturing. Spain’s Socialists won the poll which encompassed about 20 percent of the country’s voters, with the ruling People’s Party coming second but the big story was the headway made by new anti-austerity party Podemos.

The opposition Socialists won 47 seats, the PP dropped to 35 seats and Podemos took 15 seats. Spain’s other political newcomer, Ciudadanos, on the centre-right of the spectrum, grabbed nine seats.

Former president Nicolas Sarkozy’s conservative UMP party and their allies led in the first round of French local elections, denying Marine Le Pen’s far-right National Front (FN) first place. The result is a setback for Le Pen, who had hoped her anti-immigrant, anti-euro party would emerge top in the first round, boosting her ambitions to win presidential elections set for 2017.

The UMP and its allies secured around 30 percent of the vote, FN took 26 and President Francois Hollande’s ruling Socialists trailed in third with around 21 percent.

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