Fearful that EU member states and “institutional creditors” would take a complete bath, and suffer political retribution from their local constituents, Germany is once again warning all involved in the never ending Greek debt crisis, that a “bail in” involving creditors must not take place.
A “bail in” involving the Greek population (in the spirit of the Cyprus “bail in” model used years ago), we imagine will be perfectly acceptable for the German deputy finance minister, and the unelected oligarchs ruling over their EU kingdom.
“There must not be a bail-in,” Jens Spahn was quoted by Reuters.
Referring to losses that Greece’s creditors would have to take if debt was written off, Spahn told German broadcaster Deutschlandfunk….
“We think it is very, very likely that we will come to an agreement with the International Monetary Fund that does not require a haircut.”
Greece and its creditors agreed on Monday to further reforms by Athens to ease a logjam in talks with creditors that has held up additional funding for the troubled euro zone country.
Inspectors from the European Commission, the ESM, the IMF and the European Central Bank are due to return to Athens this week.
Spahn, a senior member of Chancellor Angela Merkel’s conservatives, said Greece’s problem was a lack of growth rather than debt and giving Athens debt relief would upset other euro zone countries such as Spain that had to deliver tough reforms.
“Our Spanish friends, for example, say: ‘Hang on – that wouldn’t be fair: we carry out reforms and get no haircut and now you’re talking about giving Greece one?!'”
Spahn said Germany was campaigning hard to keep the IMF on board in Greece’s bailout because of its expertise in helping countries that need to deliver reforms in return for aid.
Manfred Weber, who leads the conservative bloc in the European Parliament, said this month that if the IMF insisted on debt relief for Greece, it should no longer participate in the bailout, breaking ranks with Berlin’s official line that the program would end if the IMF pulled out.
A survey published on Friday showed around half of people in Germany, Europe’s paymaster, are against granting debt relief to Greece.
What Spahn is essentially saying is that more can kicking will take place when dealing with Greek debt and the Greek crisis.
So here is how it will play out, yet again…
- Greek PM Alexis Tsipras will agree to more austerity and “reforms”.
- More loans will be dished out to the Greek state in exchange for EU dictated reforms.
- Reforms will never take place, because the Greek population has passed breaking point.
- Rinse and repeat until GREXIT or EU collapse (whichever comes first).
In a positive sign over the recent impasse, last Monday Greece and its creditors agreed to further reforms by Athens to ease a logjam in talks with creditors that has held up additional funding for the troubled euro zone country. As a result, inspectors from the Troika are due to return to Athens this week where they will hardly be greeted with a warm reception.
The German [Spahn] has a clear political agenda in pushing for more Greek growth, which would likely be funded with even more debt, and against a haircut since the real problem facing Europe remains an insurmountable debt load. And as the third Greek bailout case study showed, Germany is willing to risk a Grexit rather than give a greenlight to the rest of Europe’s periphery that they, too, can come asking for debt haircuts and similar concessions.
Meanwhile, despite recent progress over stalled Greek bailout talks, Manfred Weber, who leads the conservative bloc in the European Parliament, said this month that if the IMF insisted on debt relief for Greece, it should no longer participate in the bailout, breaking ranks with Berlin’s official line that the program would end if the IMF pulled out.
Today’s news will hardly be welcome in Athens, where the increasingly more unpopular Syriza party has been promising a debt haircut, despite Germany making it abundantly clear such an action would not take place. In any event, we expect no real progress over the latest Greek “situation” for at least another 5 months, when Greece faces €6 billion in bond payments on July 17 and 20, at which point the can will once again be kicked, even if it means more unsustainable debt for the insolvent nation.