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Its now official, can has been kicked yet again…Greece’s Memorandum #3 is ready

Greece has reached another bailout deal but even with write downs, the outlook is grim. As Finnish Foreign Minister Timo Soini said over the weekend, “we should just admit that this isn’t going to work.”

Alex Christoforou

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While most of Greece in enjoying their annual August holidays on the islands, far away from Athens and the Quadriga (formally Troika) negotiations, Syriza has been a busy bee putting their ink to just about anything Greece’s creditors want, in an effort to kick the can just far enough down the street so as to not be “the party” that will eventually usher in the return of the drachma, and the collapse of the Greek banking system.

Via Zerohedge…

After what were described as “marathon” negotiations (although compared to the “mental waterboarding” he suffered in Brussels last month, this must have seemed like a walk in the park to PM Alexis Tsipras), Greece and its creditors have agreed to the terms of the country’s third bailout program. Here are the details, via Bloomberg:

  • Greece’s deal with creditors provides funding of ~EU85b over next 3 years ensuring ability to meet payment of debt obligations, Athens-based Press Ministry says in e-mailed statement.
  • Deal sees 2015 primary deficit of 0.25% of GDP, primary surpluses of 0.5% in 2016, 1.75% in 2017, 3.5% in 2018
  • Govt will take initiatives in coming months to settle issue of bad loans that stand at ~EU95b, consultation group on issue to be set up with creditors, govt won’t allow sale of bad loans
  • Greek power grid operator Admie to remain public asset, there will be no break up of Public Power Corp, natural gas market to be liberalized

Over the weekend, FAZ reported that creditors had drafted an MOU which would need to be discussed with the Greek finance ministry before it could be passed to EU member countries and the Greek parliament for final approval. Generally speaking, today was the deadline to produce a mutually “acceptable” draft agreement, as Athens must make a €3.2 billion bond payment to the ECB next week in order to ensure that the Greek banking sector retains access to ELA. Now, it looks like Europe will get to pay itself back after all, assuming there are no unexpected political problems later on in the week.

Reuters reports:

Greece and its international lenders clinched a multi-billion-euro bailout agreement on Tuesday after marathon talks through the night, officials said, raising hopes aid can be disbursed in time for a major debt repayment due next week.

After a 23-hour session that began Monday morning, exhausted Greek officials emerged in a central Athens hotel to announce the two sides had agreed on terms of the three-year agreement barring a couple of minor issues being ironed out.

“Finally, we have white smoke,” a finance ministry official said. “An agreement has been reached.”

Finance Minister Euclid Tsakalotos confirmed only “two or three small issues” were pending. Greek shares rose, with the banking index surging 6 percent, while two-year bond yields fell more than 4 percentage points.

Greek officials have said they expect the accord to be ratified by parliament on Wednesday or Thursday and then vetted by euro zone finance ministers on Friday. This would pave the way for aid disbursements by Aug. 20, when a 3.2 billion euro debt payment is due to the European Central Bank.

Although it certainly appears as though this is a done deal, the usual caveats apply, including the fact that Tsipras will be forced to once again beat back party infighting to pass the draft through the Greek parliament with the presumed backed of opposition lawmakers. As noted on Sunday, the Syriza rebellion which imperiled the first two votes on bailout prior actions will likely have died down in the wake of a dramatic party meeting late last month in which the Greek Premier insisted that for the time being, “opposing voices must stop.”

Once the bailout is official, Tsipras will convene an emergency Syriza party congress (likely in the first two weeks of September) – the meeting could be a prelude to snap elections.

Germany meanwhile, has pressed all sides to take their time and to avoid letting the ECB payment dictate the pace of negotiations. Whether or not Angela Merkel and German Finance Minister Wolfgang Schaueble will be satisfied that the proper diligence was exercised over the past two weeks or so remains to be seen. “One needs to look closely and then we’ll ask the Bundestag for approval when the common understanding is that this will hold for three years,” Schaeuble’s deputy Jens Spahn told ARD television on Tuesday. “It has to be convincing that it isn’t just about Aug. 20 and an installment payment, but really about how, together with the Greeks, we can have a lasting solution for Greece. Most of our colleagues agreed on July 17 that we wanted to speak to Greece and would give it another go in negotiations, and now we need a good result for them to be able to say that the result, the negotiations result is right. Privatization isn’t just about raising money, it’s about changing parts of the economy. Think about what the privatization of our federal post and federal railways meant for those industries in terms of competition and new opportunities”

The most immediate concern after the ECB payment will be “stabilizing” Greece’s woefully undercapitalized banks. Here’s more from Reuters:

During talks that dragged through Monday night, the sides reached agreement on the three main sticking points – dealing with non-performing loans held by banks, setting up an asset sales fund, and deregulation of the natural gas market.
Athens wanted to set up a “bad bank” to take on the problem loans, while creditors want them bundled and sold to distressed debt funds. It was not immediately clear how that was resolved.

Officials had also argued over how to set up a sovereign wealth fund in Greece designed to raise 50 billion euros from privatizations, three-quarters of which would be used to recapitalize banks and to reduce the debt.

Of course all of this assumes that the deal is viable in the first place which, as the IMF and the EU Commission have made clear, simply isn’t the case without some manner of debt relief or re-profiling for Athens, and even then, creditors seem profoundly unwilling to admit or even consider the fact that forcing the Greeks into a deep fiscal retrenchment in the midst of what amounts to a depression may be counterproductive to the point of absurdity. From ABN Amro (via Bloomberg):

Several potential pitfalls could knock Greece’s deal with its creditors off course in coming months, raising Grexit worries, ABN Amro analysts Aline Schuiling and Nick Kounis write in client note.

These include the weak economy, which makes for a very tough environment when implementing difficult measures, risk that austerity proves counter-productive, the need for debt relief and risk of a financing gap

Given Greece, Germany and the IMF have all expressed doubts about the program, it’s not clear how things will play out should the going get tough

And here’s BBC:

There will be few economists who believe that Greece will succeed in generating a surplus of 3.5% in 2018 and then sustaining that surplus for years – partly because it is rare for any Western economy to stay on a path of spending less than tax revenues for any length of time, let alone an economy with a private sector as feeble as Greece’s.
And I am sorry to say you will have heard this a few times from me, the really hard negotiations start soon – on how to reduce Greece’s massive debts, set to peak at close to 200% of GDP or national income in the next two years (according to the IMF) to an affordable level.

Without debt write-offs, prosperity will never return to Greece, and its future in the euro will never be assured.

With debt write-offs, populist parties throughout the eurozone will be able to claim to voters that they have nothing to fear and everything to gain from throwing out the mainstream establishment parties and re-asserting national sovereign rights to economic self-determination.

Or to put it another way, euro politics and euro economics of Greek debt forgiveness point in diametrically opposed directions.

Which is why no-one should see today’s important bailout agreement for Greece as a permanent happy ending.

So if you’re Pablo Iglesias you’re watching closely to see if Germany blinks in its staring contest with the IMF over writedowns for Greece – if they do, the door is open to demanding similar relief for Spain, which could prove to be a powerful campaign message going into elections due before the end of the year.

References:

http://www.zerohedge.com/news/2015-08-11/third-times-charm-greece-agrees-bailout-amid-rampant-skepticism

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Peace on Korean Peninsula within reach, if only Trump can remove Pompeo & Bolton (Video)

The Duran Quick Take: Episode 152.

Alex Christoforou

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RT CrossTalk host Peter Lavelle and The Duran’s Alex Christoforou discuss the results of the Putin-Kim summit in Vladivostok, Russia, aimed at boosting bilateral ties between the two neighboring countries, as well as working to contribute to a final peace settlement on the Korean peninsula.

Putin’s meeting with Kim may prove to be a pivotal diplomatic moment, as North Korea continues to work towards normalizing ties with the U.S. amidst ongoing denuclearization talks with the Trump White House.

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Via the BBC…

Russian President Vladimir Putin has said North Korean leader Kim Jong-un needs international security guarantees if he is to end his nuclear programme.

Such guarantees would need to be offered within a multinational framework, he added, following talks near Vladivostok in Russia’s far east.

Mr Kim praised the summit as a “very meaningful one-on-one exchange”.

Mr Putin said North Korea’s leader was “fairly open” and had “talked freely on all issues that were on the agenda”.

The meeting followed the breakdown of talks between the US and North Korea in February, when Mr Kim met US President Donald Trump in the Vietnamese capital Hanoi.

Those talks reportedly stalled over North Korea’s demand for full economic sanctions relief in return for some denuclearisation commitments – a deal the US was not willing to make.

Speaking after the talks on Thursday, Mr Putin said he wanted to see full denuclearisation on the Korean peninsula.

But he said this could only be achieved through respect for international law.

“We need to restore the power of international law, to return to a state where international law, not the law of the strongest, determines the situation in the world,” he said.

Mr Kim greeted Russian officials warmly when he arrived in Russia on Wednesday.

The North Korean leader was entertained by a brass band in Vladivostok before he got inside a car flanked by bodyguards, who – in now familiar scenes – jogged alongside the vehicle as it departed.

What do we know about the summit?

According to the Russian presidential spokesman, Dmitry Peskov, the Kremlin believes the six-party talks on North Korea, which are currently stalled, are the only efficient way of addressing the issue of nuclear weapons on the peninsula.

Those talks, which began in 2003, involve the two Koreas as well as China, Japan, Russia and the US.

“There are no other efficient international mechanisms at the moment,” Mr Peskov told reporters on Wednesday.

“But, on the other hand, efforts are being made by other countries. Here all efforts merit support as long as they really aim at de-nuclearisation and resolving the problem of the two Koreas.”

What do both sides want?

This visit is being widely viewed as an opportunity for North Korea to show it has powerful allies following the breakdown of the talks with the US in February.

The country has blamed US Secretary of State Mike Pompeo for the collapse of the Hanoi summit. Earlier this month North Korea demanded that Mr Pompeo be removed from nuclear talks, accusing him of “talking nonsense” and asking for someone “more careful” to replace him.

The summit is also an opportunity for Pyongyang to show that its economic future does not depend solely on the US. Mr Kim may try to put pressure on Moscow to ease sanctions.

Analysts say the summit is an opportunity for Russia to show that it is an important player on the Korean peninsula.

President Putin has been eager to meet the North Korean leader for quite some time. Yet amid the two Trump-Kim summits, the Kremlin has been somewhat sidelined.

Russia, like the US and China, is uncomfortable with North Korea being a nuclear state.

How close are Russia and North Korea?

During the Cold War, the Soviet Union (of which Russia is the main successor state) maintained close military and trade links with its communist ally, North Korea, for ideological and strategic reasons.

After the Soviet Union collapsed in 1991, trade links with post-communist Russia shrank and North Korea leaned towards China as its main ally.

Under President Putin, Russia recovered economically and in 2014 he wrote off most of North Korea’s Soviet-era debt in a major goodwill gesture.

While it is arguable how much leverage Russia has with the North today, the communist state still regards it as one of the least hostile foreign powers.

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Putin meets Kim for the first time (Video)

The Duran Quick Take: Episode 151.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a look at the historic meeting between Russian President Vladimir Putin and North Korean leader Kim Jong Un in the city of Vladivostok in the Russian Far East.

The meeting marks the first ever summit between the two leaders.

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Follow The Duran Audio Podcast on Soundcloud.

Via RT…

Leaders of Russia and North Korea sat down for a historic summit in Vladivostok, expressing hope it will revive the peace process in the Korean Peninsula and talks on normalizing relations with the US.

The summit on Russky Island, just off Vladivostok, started a little late because President Vladimir Putin’s flight was delayed. North Korean leader Kim Jong-un had made the trip by train, arriving on Wednesday.

In brief public remarks before the talks, the two leaders expressed hope the summit will help move forward the reconciliation process in the Korean Peninsula. Putin welcomed Kim’s contributions to “normalizing relations” with the US and opening a dialogue with South Korea.

Kim said he hoped the Vladivostok summit would be a “milestone” in the talks about denuclearizing the Korean Peninsula, but also build upon “traditionally friendly ties” between Russia and North Korea.

The North Korean leader also made a point of thanking Putin for flying all the way to Vladivostok for the meeting. The Far East Russian city is only 129 kilometers from the border with North Korea.

The historic summit takes place less than two months after Kim’s second summit with US President Donald Trump in Hanoi fell apart without a breakthrough on denuclearization. The US rejected North Korea’s request for partial sanctions relief in return for moves to dismantle nuclear and missile programs; Washington insists on full disarmament before any sanctions are removed.

Denuclearization of the Korean Peninsula is the main subject of the Kim-Putin summit, but there will also be talks about bilateral relations, trade, and humanitarian aid. The first one-on-one meeting is scheduled to last about an hour, followed by further consultations involving other government officials.

Following the summit, Putin is scheduled to visit China.

 

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Kim And Putin: Changing The State Of The Board In Korea

The future of Korea could be decided by these two men today.

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Authored by Tom Luongo:


Today is a big day for Korea. The first face-to-face summit of Russian President Vladimir Putin and North Korean Leader Kim Jong-un takes place.

At the same time the 2nd annual Belt and Road Forum kicks off in Beijing.

This meeting between Putin and Kim has been in the works for a while but rumors of it only surfaced last week. But don’t let the idea that this was put together at the last minute fool you.

It wasn’t.

The future of Korea could be decided by these two men today.

I know that sounds bold. But hear me out.

And while no one seems to think this meeting is important or that anything of substance will come from it I do. It is exactly the kind of surprise that Putin loves to spring on the world without notice and by doing so change the board state of geopolitics.

  • Russia’s entrance into Syria in 2015, two days after Putin’s historic speech at the U.N. General Assembly
  • 2018’s State of the Union address where he announced hypersonic missiles, embarrassing the U.S. Militiary-Industrial Complex which accelerated the Bolton Doctrine of subjugating the world
  • Flying 2 TU-160 nuclear-armed bombers to Venezuela, creating panic in D.C. leading to the ham-fisted regime change operations there.
  • Nationalization of Yukos.
  • The operation to secure Crimea from U.S. invasion by marines aboard the U.S.S Donald Cook during the Ukrainian uprising against Viktor Yanukovich.

Both Putin and Chinese Premier Xi Jinping are angry at the breakdown of the talks in Hanoi back in February. It was clear that everyone expected that meeting to be a rubber stamp on a deal already agreed to by all parties involved.

In fact the two meetings between Kim and Trump were only possible because Trump convinced them of his sincerity to resolve the ‘denuclearization’ of North Korea which would clear a path to rapid reunification.

It’s why they went along with the U.S.’s increased sanctions on North Korea as administered through the U.N. in 2017.

That John Bolton and Mike Pompeo destroyed those talks and Trump was unwilling or unable (who cares at this point, frankly, useless piece of crap that he is) to stop them embarrassed and betrayed them.

They are now done with Trump.

He’ll get nothing from either of them or Kim until Trump can prove he’s in charge of his administration, which he, clearly, is not.

And they will be moving forward with their own agenda for security and Asian economic integration. So I don’t think the timing of this meeting with that of the Belt and Road Forum is an accident.

And that means moving forward on solving the Korea problem without Trump.

It is clear from the rhetoric of Putin’s top diplomat, the irreplaceable Sergei Lavrov, that Russia’s patience is over. They are no longer interested in what Trump wants and they will now treat the U.S. as a threat, having upped their military stance towards the U.S. to that of “Threat.”

If Bolton wants anything from Russia at this point he best be prepared to start a war or piss off.

This is also why Russia took the gloves off with Ukraine in the run up to the Presidential elections, cutting off energy and machinery exports with Ukraine.

To put paid Putin’s growing impatience with U.S. policies, he just issued the order to allow residents of Lugansk and Donetsk People’s Republics to apply for Russian passports.

This will send Bolton into apoplexy. Angela Merkel of Germany will be none too pleased either. Putin is now playing hardball after years of unfailing politeness.

It’s also why Lavrov finalized arms and port deals all over the Middle East in recent weeks, including those with Lebanon, Egypt, Turkey and India.

Bolton, Pompeo and Pence are ideologues. Trump is a typical Baby Boomer, who lives in a bubble of his own design and believes in an America that never existed.

None of them truly understand the fires they are stoking and simply believe in the Manifest Destiny of the U.S. to rule the world over a dim and barbaric world.

Putin, Xi, Rouhani in Iran and Kim in North Korea are pragmatic men. They understand the realities they live in. This is why I see Putin willing tomorrow to sit down with Kim and flaunt the U.N. sanctions and begin the investment process into North Korea that should have begun last year.

Putin would not be making these moves if he didn’t feel that Bolton was all bark and no bite when it came to actual war with Russia. He also knows that Germany needs him more than he needs Germany so despite the feet-dragging and rhetoric Nordstream 2 will go forward.

Trade is expanding between them despite the continued sanctions.

Putin may be willing to cut a deal with President-elect Zelensky on gas transit later in the year but only if the shelling of the LPR and DPR stops and he guarantees no more incidents in the Sea of Azov. This would also mollify Merkel a bit and make it easier for her politically to get Nordstream 2 over the finish line.

There are moments in history when people go too far. Bolton and Pompeo went too far in Hanoi. He will pay the price now. Putin and Kim will likely agree to something in Vladivostok that no one is expecting and won’t look like much at first.

But the reality is this summit itself marks a turning point in this story that will end with the U.S. being, in Trump’s transactional parlance, a “price taker” since it has so thoroughly failed at being a “price maker.”

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