Greeks seeking Russian gifts?

April 8, 2015

Greece's PM Tsipras addresses a news conference after an EU leaders summit in Brussels

Greek Prime Minister Alexis Tsipras is in Moscow.

There has been talk from some in his Syriza party that Russia could be a substitute for EU support. Western sanctions over Ukraine leave it in no position to give Greece funding though the agriculture minister said Moscow could consider removing Greece, Hungary and Cyprus from its ban on most Western food imports, imposed in response to sanctions imposed by the EU and United States.

Russian media have also raised the possibility of a discount on gas deliveries and new loans. In an interview with Tass ahead of his visit, Tsipras was quoted as saying sanctions against Russia were “senseless”. The sanctions are up for review in mid-year. If the Greeks tried to use that as leverage in its debt talks with the euro zone, its peers would take a very dim view.

Talk that Greece will run out of money on April 9 seems to have been overly alarmist even though at least one Greek government minister said that was the case. Finance Minister Yanis Varoufakis said a deal with the euro zone on economic reforms for bailout funds needed to be struck by late April when EU finance ministers meet in Riga.

But there are hurdles to clear this week. Today, Greece will sell 875 million euros of six-month Treasury bills to refinance a maturing issue. The auction will be a key test of whether the government can find other sources to plug a potential gap of about 350 million euros if foreign investors refuse to roll over their T-bill exposure. Tomorrow a 450 million euro repayment to the IMF falls due which the government has committed to meet.

Greece can get 7.2 billion euros of new loans from the euro zone and the IMF if it implements reforms that the previous government agreed under its bailout programme. The problem is that the euro zone does not consider the new government’s proposals to be sufficient and it wants to see them hardened up and some implementation before stumping up.

Euro zone deputy finance ministers and the institutions representing the creditors are due to hold further discussions on Greece today and on Thursday. Officials said the aim was to have an agreed list of reforms, including their impact on the Greek budget by the next meeting of euro zone finance ministers on April 24 in Riga. That feels like a long time away.

Austria’s finance minister said this morning he did not believe an unplanned Greek exit – or Grexident – from the euro zone had become more likely in the past month but an orderly withdrawal could be discussed.

French Prime Minister Manuel Valls will present further measures to aid economic growth and employment, possibly including some kind of new job contract that allows small companies to hire and fire staff more easily and measures to boot public and private investment.

New deregulation measures would confirm Vall’s and President Francois Hollande’s intention to face down Socialist Party hardliners – despite a drubbing in recent regional elections — and continue to pursue business-friendly economic reforms along with a refusal to drastically cut public spending.


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