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1) European authorities forced to stave off Greek banking collapse as capital controls loom ECB increases tap on emergency funding as prospect of capital controls and bank closures beckon before Monday's emergency summit by Mehreen Khan The Telegraph, June 19 <http://www.telegraph.co.uk/finance/economics/11686667/European-authorities-forced-to-stave-off-Greek-banking-collapse-as-capital-controls-loom.html> Greece's banking system was saved from a weekend collapse after the European Central Bank was forced to pump emergency rescue funds and halt the immediate threat of capital controls. The ECB took the unusual move to raise its emergency liquidity assistance (ELA) twice in the space of three days as a further €1.2bn fled the financial system on Friday. The ceiling on ELA was reportedly raised by €1.8bn according to reports, and came following a request from the Bank of Greece. The Frankfurt-based central bank took the drastic action after its officials warned European finance ministers that Greece's banks may not be open for business on Monday. Total deposit flight has now soared to €4.2bn this week as full-blown panic over the country's eurozone future has set in. ELA funding is one of the last critical links keeping Greece in the single currency. Without the funds, Greece would likely find itself in the midst of a bank run, forcing the Leftist government to impose draconian capital controls to prop up the banking system. Such measures, which include deposit withdrawal limits, were last seen in the eurozone in 2013 in Cyprus after the ECB had threatened to cut the life support for Nicosia's financial system. The drip feed of cash will now be reviewed by the ECB's governing council on Monday, when EU leaders and finance ministers will convene for a last ditch attempt to thrash out their differences with Athens. . . . 2.a) Greece offers new proposals ahead of emergency summit CNBC, June 21 (Reuters) <http://www.cnbc.com/id/102776138> Greek Prime Minister Alexis Tsipras made a new offer on a reforms package to foreign creditors on Sunday, signaling eleventh-hour concessions to break a deadlock that has pushed Greece to the brink of bankruptcy. After months of wrangling and with anxious depositors pulling billions of euros out of Greek banks, Tsipras's leftist government showed a new willingness this weekend to make concessions that would unlock frozen aid to avert default. French President Francois Hollande, on a visit to Milan, confirmed Greece had submitted new proposals. EU diplomats said the proposal had not arrived but representatives from the country's European and IMF creditors were set to meet at 1500 GMT on Sunday to discuss it. . . . "There is no time to lose. Every day counts. Talks and negotiations must continue so that an agreement is reached," Hollande told a joint news conference with Italian Prime Minister Matteo Renzi. Locked out of bond markets and with bailout aid frozen since summer last year, Athens is quickly running out of cash. The deputy finance minister on Sunday confirmed Athens had enough money to pay public sector wages and pensions this month. . . . Money has drained out of Greek banks after a breakdown in talks last weekend, and Greece might have to impose capital controls within days if there is no breakthrough. Sources in Frankfurt and in Brussels said the European Central Bank's board would discuss the liquidity of Greece's banking sector at 0830 GMT on Monday. The sources said Greek pre-orders for deposit withdrawals for Monday had already reached 1 billion euros - after savers pulled over 4 billion euros out of their banks last week. European ministers have played down the prospect of a final agreement on Monday but hope a political understanding can be reached in time for a full deal by the end of June. For a deal to work, Tsipras will need a solution that is acceptable to his party or else may be pushed to call a snap election or a referendum to secure a mandate for an agreement. His Syriza party was due to hold a rally in Athens on Sunday to send "a loud message of resistance" against demands for more cuts and tax hikes in a country battered by years of recession. . . . "Democracy cannot be blackmailed, dignity cannot be bargained," the Syriza party said in a statement on Sunday, announcing its planned protest. "Workers, the unemployed, young people, the Greek people and the rest of the peoples of Europe will send a loud message of resistance to the alleged one-way path of austerity, resistance to the blackmail and scare-mongering." But the mood has also hardened in Germany, which has contributed more money than any other country to bailing out Greece. German Chancellor Angela Merkel is under pressure from within her ranks not to give in to Greek demands, even if that means contemplating Greece leaving the euro zone. Merkel's Bavarian allies warned against giving in to Greece, with senior Christian Social Union lawmaker Hans Michelbach saying he saw no realistic chance of an agreement on Monday. "If the EU lets the government in Athens get away with its intransigence, we can bury the euro," Michelbach said in a statement on Sunday. "Either Greece declares itself willing for a viable solution or the country must leave the euro. The euro zone could cope with the consequences of a Greek exit," he said. 2.b) The government’s latest proposals for a deal The government is said to be willing to make concessions on pensions and VAT while still aiming for a commitment to restructure the debt. by Nikos Tsitsas Times of Change, Greece, June 21 <http://www.thetoc.gr/eng/politics/article/the-governments-latest-proposals-for-a-deal> Under intense pressure in light of the (likely) decisive emergency summit meeting of eurozone leaders on Monday, Greek cabinet ministers have been in continuous meetings since 11am on Sunday. The Prime Minister Alexis Tsipras has also spoken by phone to the German Chancellor Angela Merkel, the French President Francois Hollande and the President of the European Commission Jean-Claude Juncker according to an official government announcement. The Prime Minister, according to Megaro Maximou presented the three leaders with a new Greek proposal for a mutually beneficial solution which would provide a decisive solution to the problem and not another temporary fix. [Megaro Maximou: the Maximos Mansion is the official seat of the Prime Minister of Greece located in downtown Athens, Greece, near Syntagma Square] This evening, Alexis Tsipras is to travel to Brussels where head negotiators Nikos Pappas and Efkleidis Tsakalotos have already been holding talks with representatives of the creditors. Following the Prime Minister’s return from his visit to St Petersburg where he met with Vladimir Putin, the pressures on Greek were further ramped up both on the part of Greece’s creditors and the US. The American Treasury Secretary, Jack Lew, speaking to CNN, said that Greece ‘bears the burden’ of taking the difficult decisions in order for a solution to the impasse to be found. "It's clear that within Greece, the consequence of a failure here would mean a terrible, terrible decline in their economic performance," Lew warned. "It will hurt the Greek people. They will bear the first brunt of a failure here." . . . According to sources, the Greece side will present the lenders with a package of counterproposals. These include: Social security reforms with the elimination of early retirement schemes beginning 1/1/2016. At the same time the Greek side is also discussing cutting high supplementary pensions, which, however is likely to have a small net fiscal effect given that only roughly 80,000 people receive such payments. According to government officials Athens’s will propose raising VAT on electricity to 13% from 6% (and not to 23% as the lenders have proposed). Restaurants would also be taxed at 13% while the rate for medicines would remain at 6%. The Greek side is examining reducing defense spending, increasing solidarity taxes on incomes over 30,000 euros and additional taxes on businesses with profits over 500,000 euros. The government is also examining reforms to open closed professions in line with recommendations from the OECD. According to government officials, the Greek side is seeking an agreement that would lead to a decisive solution to the Greek issue, with comprehensive reform pledges as well as a commitment on the part of the lenders to restructure the debt which is considered by the administration to be unsustainable. The government is expected to submit proposals to extend the schedule for debt repayments and extend bond maturities up to 100 years. For Megaro Maximou an agreement to restructure Greek debt is considered a necessary precondition for a deal. At the same time the Greek side does not consider recently leaked proposals on the part of the lenders to extend the current bailout program as a positive development. However the government does appear willing to accept such an extension even with tough terms attached in order to break through the current impasse. At the same time the Minister of State, Nikos Pappas in comments to the Greek newspaper Ethnos on Sunday expressed the hope that an agreement be reached that would not include the IMF in the bailout mechanism. For their part the European partners are intensifying the pressure on the Greek side following the warning by the President of the European Council, Donald Tusk who said that on Monday Greece would be called to accept the proposal put forward by the institutions or face default. 3.a) Tsipras meets with cabinet on eve of bailout talks by Theophilos Argitis, Eleni Chrepa & Antonis Galanopoulos I Kathimerini, Athens, June 21 (Bloomberg) <http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_21/06/2015_551311> Greece’s cabinet was locked in talks with the prime minister ahead of a meeting on Monday that will decide the nation’s future in Europe’s currency bloc. . . . “Austerity must end,” government spokesman Gabriel Sakellaridis said after Greek negotiators ended a separate meeting on Saturday with Tsipras. “A different Europe is necessary, a different Europe is possible.” . . . Greek Finance Minister Yanis Varoufakis, in opinion pieces for The Irish Times and Frankfurter Allgemeine Sonntagszeitung, blamed his European counterparts for their unwillingness to consider Greece’s proposals... . . . To meet creditor demands for measures equal to 2.5 percent of GDP, Greece is considering proposals that include a levy on companies with annual net income of more than 500,000 euros and a higher ‘‘solidarity levy” for individuals earning more than 30,000 euros a year, a government official said, speaking on condition of anonymity because the plan hasn’t been finalized. . . . German Chancellor Angela Merkel and her French counterpart, Francois Hollande, spoke by phone on Friday. As leaders of the biggest economies in the 19-nation euro bloc, they’ve presented a united front against Tsipras, who has spent his months in power trying to roll back austerity policies. It may be getting more difficult for Hollande to stand firm. On Saturday he received an appeal from lawmakers including some from the ruling Socialist Party to end the “financial blackmail” of Greece. The message of France “cannot be a docile reminder of the rules at a time when the house is burning,” the lawmakers said in an open letter published on the website of France’s Communist Party. <http://www.pcf.fr/72202> . . . Greece was given a few more days of financial breathing space from the ECB, which Friday increased again the maximum amount of emergency funding Greek banks can access. On Monday, the ECB will revisit that emergency funding as deposits continue to flee Greek banks at dizzying rates. . . . 3.b) Tsipras to meet creditors before eurozone summit I Kathimerini, Athens, June 21 (AFP) <http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_21/06/2015_551323> Greek Prime Minister Alexis Tsipras will meet leaders of Athens' three international creditors on Monday ahead of an emergency eurozone summit on the Greek debt crisis in Brussels, a Greek government source said. Council of Europe head Donald Tusk called the meeting with European Commission President Jean-Claude Juncker, International Monetary Fund chief Christine Lagarde and European Central Bank leader Mario Draghi, as well as the head of Eurogroup finance ministers, Jeroen Dijsselbloem, the source said on Sunday. . . . 3.b) Tsipras Calls Merkel, Hollande, Juncker to Present Mutually Beneficial Proposal by Philip Chrysopoulos The Greek Reporter, June 21 <http://greece.greekreporter.com/2015/06/21/tsipras-calls-merkel-hollande-juncker-to-present-mutually-beneficial-proposal> . . . According to Financial Times, François Hollande and Angela Merkel both telephoned Alexis Tsipras, the prime minister, to remind him he needed a “staff level” agreement with the European Commission, IMF and ECB ahead of the summit. They told him the summit was not for “negotiations” — which anyway would be all but impossible in a forum including all 19 eurozone members — and urged him to reach a deal with the institutions. EU officials and bankers have warned that the failure to reach a deal on Monday could lead to a Greek default on its debts and even force its exit from the Eurozone. If a deal is reached, the two leaders said the parties could then start discussing a third bailout at the summit. The Greek prime minister also held a long cabinet meeting on Sunday in which they discussed the situation regarding the Greek problem and tomorrow’s crucial summit of Eurozone heads of state. He also briefed his ministers on the talks with the three European leaders. German newspaper Frankfurter Allgemeine Zeitung (FAZ) claims that reliable sources said the European Commission is to offer Greece an extension to the current bailout program until September, offering a bridge deal of 6 billion euros in exchange for painful reforms. The deal will have to pass the Greek Parliament. By mid-July, the parliaments of Eurozone member states, including Germany and the Netherlands, will approve or not if further aid to Greece can be granted. This way, 3.7 billion euros cane be disbursed immediately. Then additional funds from the European Financial Stability Fund can be given along with funds from the Hellenic Financial Stability Fund intended for the recapitalization of Greek banks. . . . 4.a) Greece crisis: creditors aim to strike deal to include six-month rescue extension Deal may also include up to €18bn in rescue funds, and later debt relief, but EU officials stress Alexis Tsipras must make concessions by Ian Traynor in Brussels and John Hooper in Athens The Guardian, Sunday 21 June 2015 <http://www.theguardian.com/world/2015/jun/21/greece-crisis-creditors-aim-deal-six-month-rescue-extension> Greece’s creditors are aiming to strike a deal on Monday to stop Athens defaulting on its debt and possibly tumbling out of the euro, by extending its bailout by six months, supplying up to €18bn in rescue funds and pledging later debt relief for the austerity-battered country. But EU officials, privately disclosing details of the proposed deal, stressed that a breakthrough hinged on the prime minister, Alexis Tsipras, making concessions on fiscal targets, pensions cuts and tax increases that he has resisted since he came to power five months ago. Following a cabinet meeting in Athens, Tsipras is believed to have offered Greece’s creditors concessions on tax and pensions reform. But it was not clear whether the offer went far enough to make a final agreement possible on Monday. Time is also running out for the Greek banking system, with Reuters reporting on Sunday that €1bn worth of withdrawal orders had been lodged with Greek banks over the weekend – on top of the €4bn that left the Greek banking system last week – and that the European Central Bank was set to discuss extending financial help to those institutions on Monday morning, amid fears that Greek banks would be unable to open on Tuesday. A hectic round of telephone diplomacy took place on Saturday and Sunday between leaders in Athens, Berlin, Paris and Brussels while technocrats on both sides sought to hammer out the small print of the fiscal arithmetic forming the basis for a last-minute agreement days before Greece’s bailout expires. Greece must pay €1.6bn owed to the International Monetary Fund by Tuesday 30 June. With time running out, the only way an IMF default could now be avoided is for the ECB to raise the ceiling on the short-term debt or T-bills Athens is allowed to sell, the officials said. This would need to happen by Monday next week. The sources also signalled moves to assuage Tsipras’s key demand – that the creditors need to offer debt relief to Greece. Some form of debt restructuring would be promised to Athens, but it would come with strings attached and not as part of the current bailout package, they said. Eurozone finance ministers will meet at lunchtime on Monday in Brussels, four days after a previous session collapsed in mutual recrimination in Luxembourg. Their meeting was brought forward by two and a half hours and will be followed by an emergency eurozone summit in Brussels aimed at averting the first ever departure of a country from the single currency. The summit is a success for Tsipras who has consistently demanded that the debt crisis can be resolved only by Europe’s political leaders. But for the summit to have a chance of succeeding, the finance experts from the creditors – the IMF, the European Central Bank and the European commission – and their Greek counterparts have to nail down the detail to put before the ministers and government leaders. If the talks remain inconclusive on Monday evening, another eurozone summit could be convened, either next week as Greece’s bailout lapses or as part of a regular scheduled full EU summit on Thursday and Friday. “This will entirely depend on the eurogroup [finance ministers] and the summit tomorrow,” said one official. The Greek cabinet met on Sunday to discuss what a source close to the government said was an outline proposal drawn up on Saturday by the prime minister’s closest political and economic advisers. It included changes to the tax and pension systems. But, the source said, Greece’s negotiators would not have a mandate to concede a VAT rise on electricity. And they would have to operate within strict limits in discussing pensions cuts. The proposals were said to include a new three-band income tax system. But there would be no offer of a change in property tax. Benefit cuts are perhaps the most delicate of all the issues that Tsipras’s government has so far defined as red lines not to be crossed. The source said Athens was only ready to concede a reduction in higher pensions that would affect no more than 80,000 people. But a topup for the worst-off pensioners would remain untouched. The Greek concessions were also said to include new taxes, the elimination of early retirement allowances and a levy on companies. According to state television ERT, the new Greek proposal also includes increasing Greece’s primary surplus target to 1% of gross domestic product for this year, as demanded by the creditors and hitherto resisted by Athens. The primary surplus refers to the amount that tax income collected by the government exceeds state spending, excluding debt servicing costs. By agreeing to a higher primary surplus, Tsipras effectively agrees to greater austerity than previously sanctioned. Apart from the €1.6bn due to the IMF next week, Greece has to redeem almost €7bn worth of bonds at the ECB in July and August. It does not have the money. The six-month rescue extension being mooted would see Greece qualify for €7.2bn in bailout funds still to be disbursed as well as €10.9bn already lent to Greece but earmarked for bank recapitalisation. The latter sum could be quickly transferred to the government to facilitate the ECB bond redemption. The other money would be tied to progress on Greek economic reforms, notably the detail of the 2016 budget that Tsipras will table in the autumn. Yanis Varoufakis, the outspoken Greek finance minister, said Greece’s fate hinged on the German chancellor, Angela Merkel, and told her she faced a stark decision. He added that there would be no agreement that did not include the prospect of debt relief for Greece. Varoufakis’s spokesman reacted sceptically to suggestions of creditor promises on eventual debt relief, describing the eurozone as “pathological liars”. “The prime minister presented [Merkel, Hollande and Juncker] with Greece’s proposal for a mutually beneficial agreement that will give a definitive solution and not a postponement of addressing the problem,” a statement from Tsipras’s office said. The last-ditch talks come as Tsipras’s Syriza party plans a rally in Athens to send “a loud message of resistance” against demands for more cuts and tax hikes in a country battered by years of recession. “Democracy cannot be blackmailed, dignity cannot be bargained,” the party said in a statement on Sunday. “Workers, the unemployed, young people, the Greek people and the rest of the peoples of Europe will send a loud message of resistance to the alleged one-way path of austerity, resistance to the blackmail and scaremongering.” 4.b) Final offer: 6 month extension with tough conditions Sources indicate that Greek government will be called on to accept a deal that would extend the current programme for six months in return for reform commitments. Times of Change, Greece, June 20 <http://www.thetoc.gr/eng/politics/article/final-offer-6-month-extension-with-tough-conditions> The next 48 hours is expected to be fraught for Greece following the ultimatum issued by the country’s creditors that a deal be achieved in Monday’s emergency Eurogroup meeting, which will then need to be approved by the eurozone’s leaders at the emergency summit that has been called for later in the day. . . . ...it appears that the final offer emerging from Greece’s creditors is for an interim deal that would see Greece’s current bailout programme extended by 6 months – with tough conditions attached. Greece’s 2nd bailout programme which was originally planned to expire at the end of 2015 has been extended twice and is due to expire at the end of June. Greece’s last chance for a deal? The latest offer, as has been indicated by EU sources, would see the current programme extended until December of 2015 in order to provide the Greek government with some breathing space to avoid defaulting. Approximately 10 billion euros left over from the recapitalization fund for Greek banks would be lent to the country in order for it to meet the debt repayments due to the ECB and IMF over the coming months. In parallel the ECB would allow the Greek government to raise additional funds by permitting Greek banks to purchase approximately 2 billion euros more worth of short term debt, something that Frankfurt has resisted to date. In return the government would have to commit to implementing the reforms proposed following the recent ‘meeting of the five’ between Angela Merkel, Francois Hollande and the heads of the European Commission, ECB and IMF. During the six month period a new round of negotiations would be held in order to put together a third bailout package. According to sources this would include a ‘small to medium double-digit amount’ of bailout loans. The IMF’s participation in such a third bailout is said to be contingent on European governments agreeing to restructure the Greek debt they hold in order to render it sustainable, something which Germany in particular has strongly resisted. 5.a) Greek Alternate Admin Restructuring Min Katrougalos Sees Deal Next Week by A. Makris The Greek Reporter, June 21 <http://greece.greekreporter.com/2015/06/21/greek-alternate-admin-restructuring-min-katrougalos-sees-deal-next-week> An agreement will be reached next week, Alternate Interior and Administrative Restructuring Minister George Katrougalos said in an interview with French radio Europe1 on Sunday. He underlined that austerity does not concern only Greece, but all Europe and added: “Greece is not a separate case. In today’s Europe there are two contradictory positions – social Europe and austerity.” Katrougalos also noted that Greek banks will not impose a capital control and stressed the importance of the coming week. “Next week is crucial. It is not just Monday. It is an ongoing effort,” he said. As for the possibility of an extension, he said that technically it is feasible, but he is against that prospect. (source: ana-mpa) 5.b) Lafazanis: the government of the left 'will not humiliate itself' The leader of the Left Platform raised the prospect of elections if any agreement requires the support of opposition MPs to be passed in parliament. Times of Change, Greece, June 20 <http://www.thetoc.gr/eng/politics/article/lafazanis-the-government-of-the-left-will-not-humiliate-itself> Panayiotis Lafazanis, the Minister of Productive Reconstruction and Energy and leader of the roughly 30 MPs of the hardline ‘Left Platform’ raised the prospect of elections in the event that the government fails to secure an agreement acceptable to all wings of SYRIZA in an interview with the newspaper ‘Paraskinio’. Saying that the governing left would not ‘humiliate itself’ he told the paper that if an agreement was put before parliament and was not supported by 30-40 SYRIZA MPs but passed with the support of opposition parties such as New Democracy, PASOK and To Potami then the solution would be to call snap elections. With the lenders insisting on tough concessions from the government for any extension of Greece's bailout deal, it remains an open question if Prime Minister Alexis Tsipras can reach a deal that can be passed through parliament without defections from the governing coalition. _________________________________________________________ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
