I’ve been waiting for some clarity after the winding up of the Greek Eurogroup emergency meeting before posting and it appears we the following from AP:
Greece has accepted the principle of extending its current bailout programmewhich expires at the end of the month so as to keep it afloat while a long-term debt solution is worked out, Greek government sources said Monday.
“For the first time, we accept the extension of the programme as the only way forward,” one source said as eurozone leaders discussed Greece’s future in the single currency ahead of the June 30 end of its current aid programme.
I have no idea why Greece continues on this path. Had it bit the bullet four years ago and abandoned the euro it would now be far better off with lots of pain behind it and a fully restored real effective exchange rate driving new growth. It is almost certain that unemployment would be lower than it is today.
But deeper into the hole it goes and the next question is will Syrizia now survive:
To avert a default and possible exit from the eurozone, Greek Prime Minister Alexis Tsipras must sell Germany’s chancellor, Angela Merkel, on his plan to fix Greece’s finances.
Then he needs to persuade Vassilis Chatzilamprou.
But out at the Resistance Festival, an annual gathering of Greece’s far left, the lawmaker from Mr. Tsipras’s left- wing Syriza party said he was in no mood for submission.
“We cannot accept strict, recessionary measures,” Mr. Chatzilamprou warned. It was after midnight Sunday, and the weekend festival was winding down. “People have now reached their limits.”
Syriza isn’t a traditional party but a coalition of left-wing groups with an intricate family tree formed out of doctrinal splinters and squabbles. It is those many, disparate factions that Mr. Tsipras must also satisfy with any potential bailout agreement with Greece’s creditors.
And from Zero Hedge comes Deutsche:
Subject to further progress this week, focus is likely to shift very quickly to the Greek domestic political front. Disbursements for Greece ahead of the IMF tranche due at the end of the month will require domestic parliamentary approval. It is likely that the Greek PM would first attempt to obtain approval from the SYRIZA party’s 200-strong Central Committee before bringing an agreement to parliament. In the event of failure at the party level, a referendum would likely be called. In the event of party approval, a vote would be likely taken to the parliamentary floor. Depending on the process adopted, such a vote may take between 2 days to a week.
It will remain a major challenge for the Greek PM to successfully pass a potential agreement through parliament. Local press reports that 10-40 SYRIZA MPs are likely to dissent (the government has an 11 MP majority), while overnight the Independent Greeks junior coalition partner (12 MPs) has also raised the possibility of withdrawing from government. How the political process plays out largely depends on the number of MPs the current government loses. A loss of less than thirty parliamentarians may force a change in coalition to include the two small moderate parties in parliament (PASOK and the River) jointly controlling 30 MPs. More substantial losses requiring the support of major opposition party New Democracy would open up the possibility of broader changes to the government or a referendum.
Greek crisis to roll on.
