Greek Public Coffers Expected to Run Dry Next Month
Greek Prime Minister Alexis Tsipras meets German Chancellor Angela Merkel, there were no concessions forthcoming, and ECB has placed significant and severe restraints on Greek banks causing capital flight, says Dimitri Lascaris
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries coming to you from Baltimore.
Many German newspapers have been warning businesses and market watchers that the Greek debt crisis will come to a head in about two weeks. According to a NASDAQ published Money Morning report it will hit a financial wall by the end of next month. Greece is in 323 billion Euros in debt, which is about $352.7 billion dollars. Which is more than 175% of its GDP. Now, the debt-to-GDP ratio is an important indicator in a country’s ability to pay back its debt. The higher the ratio, the more difficulty it will have in paying its debt.
Now, this is all taking place while the new leadership of Greece is expected to follow through on their campaign promises. In an effort to honor that, this Wednesday Prime Minister Alexis Tsipras passed a bill providing more food stamps and electricity subsidies.
Now joining me to discuss the plight of Greece and the developments to date is our Greek analyst Dimitri Lascaris. Dimitri is a partner with Canadian law firm Siskinds, where he heads the firm’s award-winning securities class actions practice. Siskinds was recently ranked the top plaintiff-side action firm in Canada. Thank you so much for joining us, Dimitri.
DIMITRI LASCARIS, SECURITIES CLASS ACTIONS LAWYER IN CANADA: Thank you, Sharmini.
PERIES: So Dimitri, Alexis Tsipras and Angela Merkel met early this week. Now, Greece is obviously in the brink of default on its debt. What will happen in two weeks, and did the meeting lead to anything constructive?
LASCARIS: Well, in the lead up to the meeting, Tsipras is reported to have sent a letter to Ms. Merkel in which he talked rather candidly about the growing risk of default, and was, I think, conveying a sense of almost desperation about the Greek banking system and the fact that the ECB has placed very significant, severe restraints upon the funding of the Greek banking system, where there has been over the last few months a terrible deposit flight, putting the entire system at risk. And it was within that context that he went to Germany.
You know, he–it’s fair to say was not able to secure any substantive concession on the part of Ms. Merkel, although she did reiterate what is at least the official policy of the German government, that Greece remain within the Eurozone. But by the same, at the same time, she was reiterating, as the German government has from the very beginning of the, of the tenure of this current Greek government, its determination to see full compliance with the bailout agreement that was put in place by the prior regime in Greece.
So regrettably it does not appear that there has been any significant concession secured, and one thing that was also notable about the visit of Mr. Tsipras to Berlin is that he was apparently the first foreign leader, no other leader comes to mind, who went to the capital of reunified Germany, and declared there that Germany had an obligation to pay war reparations to a country that it had occupied in the second world war. As you can imagine, this was not met and has never been met with any, any, you know, receptiveness by the government of Germany. He continued to say that the matter of war reparations is legally closed, without really offering any moral justification for that position.
But at the same time, there are some signs within the German establishment of sympathy towards this position. The German magazine Der Spiegel published an article in the last ten days in which it talked about the issue of war reparations, and in particular talked about an infamous loan that the central bank of Greece was forced to make by the Nazi regime during the second world war, which by widely accepted calculations now amounts to 11 billion Euros.
There was also a story which got a lot of play in the European press about a German couple who went to Greece [inaud.] And offered to the mayor of the town that they happened to be visiting what they calculated to be on the back of an envelope their share of German war reparations. So you see some stories like this, little indications … and the Der Spiegel story to be fair is not a little indication, it actually is quite a significant, I think, development of some sympathy towards the Greek argument about war reparations.
But the fact of the matter is that the German government, the official position remains one of complete intransigence towards that particular argument, complete entrenched intransigence towards a relaxation of the austerity regime. And so-
PERIES: I should add, Dimitri, that Der Spiegel also had an interview with Alexis Tsipras, the Prime Minister, online as well. And you’re right, but that is not how most of the business press is still covering the Greek debt crisis.
LASCARIS: I think that’s right. I think that the most of the business press continues to view this–I saw, for example, some financial analyst refer to the Tsipras government as “bombastic” today. They continue to characterize them as being radical, even though their demands are anything but radical, they’re quite modest. You know, they say that their rhetoric is inflammatory. The business press has a very unfavorable view of the Tsipras government, and unfortunately I think that’s distorting an understanding within the Eurozone of the true causes of the crisis within Greece.
There’s a notion that, you know, the Greeks have been living beyond their means, no responsibility for the crisis falls on the shoulders of others within the Eurozone. That’s a position that the German government has articulated very clearly, and repeatedly, and it’s one that’s going to get in the way of any humane, constructive resolution of the crisis.
At the end of the day everybody has to own up to their share in this crisis, and you know, the architects of the Eurozone in particular need to own up to the fact that what they devised in terms of this currency union is a fatally flawed currency union, and one that needs to be dramatically reformed if it’s going to survive. Whatever the Greek government does, there is a very serious risk that this currency union will collapse.
PERIES: So Dimitri, what will happen next month?
LASCARIS: Well, the current estimation is that unless there is external funding provided to Greece from some source, whether it be the ECB, the IMF, the Eurozone, or a combination of those, those potential funders, or somewhere else, that the government is going to run out of money on April 20th, and at that point is going to default on its debt. The most recent report, I saw one today, was that in addition the government has been given a deadline by next Monday to produce a much more detailed program whereby it would implement the requirements of the bailout regime that was put in place before it was elected.
I think that whatever the Greek government may want, it is going to be put to a choice in the month of April. That seems to be increasingly the case. It is either going to have to completely capitulate to the regime that was put in place before it was elected, or it is going to have to default, and most people seem to believe that that is going to precipitate an exit from the Eurozone.
So it seems that matters are coming to a head, and that the agreement that was struck several weeks ago with the Eurogroup, which was believed to have bought Greece about four months of breathing space, in fact didn’t even buy them that much.
PERIES: And also, Dimitri, apparently President Obama has made some sort of intervention. What do you know about that?
LASCARIS: Well, that’s the rumor. The Obama government, the administration, has steadfastly refused to give any substance to those rumors. They don’t deny that there have been, or there may have been some discussion between President Obama and Angela Merkel about the situation. But externally, there’s no indication that those discussions, if in fact they have occurred, and they probably have, have had any effect in terms of moderating the attitude of the Eurozone governments towards the Greek crisis. They continue to be adamant on full compliance with the bailout program, and that means austerity.
PERIES: And then getting back to how the level of intolerance on the part of the right-wing business press in Germany and throughout Europe, frankly, is–to what end? I mean, what is it that they are pushing for? What would they like to see?
LASCARIS: I think they’d like to see the Syriza government act exactly the way the coalition between PASOK and New Democracy acted previously, which was as a, frankly, a lapdog to the neoliberal austerity block within the Eurozone. And a government that has no real interest in representing the interests of the people, the populace, but is in fact interested in advancing what is, ultimately, a class war. This isn’t about Germany against Greece. This is about a European elite against the people of Europe, and the front line of that battle is in Greece at the moment, but that battle really extends throughout the Eurozone.
And that’s the reality, and the business press, regrettably, is–but not surprisingly–is siding with the elite in this class war.
PERIES: All right. Dimitri, thank you so much for joining us today.
LASCARIS: Thank you.
PERIES: And thank you for joining us on The Real News Network.
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