07/2015 – 07/2016 Athens; one year after the referendum about accepting or not a new plan from EU to save Greece, how is the situation?

One year ago all the newspapers, websites and social networks were full of news and opinions about the Greek turmoil, and now? Why are we not caring anymore? Is the Hellenic country safe and out from the financial turmoil? Not at all.

Without stating an opinion about the referendum results of the last year and the fact that, even if the “no” won, as expected, the prime minister decided to accept the EU “saving” plan, lets see which is the actual situation.

Basically, nothing changed so far, the country is without money and, as in 2015, they should find 3.8 billion to reimburse the ECB and pay salaries and pensions until July 2016. Keep ready because the word “Grexit” will be everywhere sooner.

Let’s now have a look at some pills from the journalist Ettore Livini:

  • In July 2015 Greece and the Troika have signed a new rescue plan by 86 billion . Greece is safe or there is still the risk of Grexit ?

The stakes imposed by EU, ECB and IMF are clear: Athens will receive financial aid only if they stand by the commitments with creditors. And without the money from the ex-Troika, the country does not stand. It has been disbursed to the Government Tsipras 23 billion. Used in large part (but less than expected) to recapitalize banks and to repay the creditors themselves. The Greek government has collected the first tranche of loans regularly thanks to the brisk pace at which the reforms approved in the first few months in office. But now we are the hardest rocks: pensions, non-performing loans, reorganization of the tax system. Representatives of Brussels, Frankfurt and Washington – divided among themselves – are at this time in the Greek capital to find an agreement on these issues. Without an agreement, do not reopen the Stock Exchange cords. And without fresh money, Athens will end in early July liquidity, when lacking the funds to repay the Central Bank and to honor salaries and public pensions. Rekindling the default assumptions.

  • What is the distance between the positions of Athens and creditors at the moment?

 Athens has put into the pot a maneuver on pensions equal to 1% of GDP, made mostly of increases in contributions paid by businesses and self-employed. “We’ve already cut 11 times since 2009, we can not reduce more given tha 52% of households have welfare benefits as a primary means of livelihood,” says the government. Tsipras is convinced that this maneuver is sufficient to achieve the targets agreed with the Troika – a surplus of 3.5% of the budget in 2018 – thanks to the economic recovery in 2015 fell (-0.2%) much less of estimates (-2%) of the Agreement of July. Creditors say instead that it is not enough. The spread with Bunds, fell from 1,168 points in June 2015 to 888 today, and the stock exchange, jumped by 25% from the lows of February, seem to bear him out. Brussels pushes to enact tougher measures, amounting to 2.5-3% of GDP. The Fund wants 4.5% cuts. Pills hard to swallow for a country that has already burned 25% of the economy and the austerity long seven years did not solve any of his problems. The debt, in spite of the restructuring and scissors 70% to that of private, is still 321 billion, or 180% of GDP. Of these 220 billion they are owed money in EU, ECB, IMF and ESM.

From what we have seen so far, we can already understand that the EU plan offered (or “imposed” as you prefer) to Athens is not giving any result. The question is: how to solve it? How to help a population that has a 15% under the poverty line (with a net monthly income of 180 EUR)?

Do not forget, Greeks have saved thousands refugees from the Aegean Sea and paradoxically this is getting their situation even worse.

Clearly EU failed somewhere.


Mario Rendola