The Greek Prime Minister has some good cards close to his chest, according to Slog sources
You can hardly blame many EU commentators for having found The Slog’s ‘bondholder haircut and debt forgiveness’ Greek story from last weekend far-fetched. But an increasingly wide range of observers have since emailed me to say they’re convinced that the story is well-founded. Now more clues are emerging….and again, they relate to three consistent themes in The Slog’s approach to the Greek crisis: Samaras is being (with his Finance Minister) increasingly secretive towards his Coalition partners; the geopolitical dimension remains as important as ever; and the Germans are not going to budge: either the Greeks toe the line, or they’re out. (And if Berlin’s will doesn’t prevail, they’re off).
Earlier this week, Merkel spokesman Stefan Siebert said there would be no more compromise with Athens, but then made what I found an odd statement under the circumstances. He said that “further decisions will have to wait until after a report from the troika is released in October.”
Publicly, Greece can’t wait that long. The Athens bond issue raised more than enough to pay off the ECB’s maturing bondholding on August 20th. Several sources across the markets think it highly likely that Mario Draghi bought a fair chunk of them himself, in order to neutralise the potential insolvency. But having scraped through that hole in the wall, the Greeks are still left with only a week or more of money – by which time they will need the €13.5bn bailout tranche to avoid insolvency again. The new Samaras/Coalition plan for additional savings is €4bn short of what the Troika wants.
Somebody, somewhere put a proposal(s) to the Coalition and the Troika last week, the substance of which was enough to reduce the tension. My own view is that the Siebert remark referred to above unconsciously recognised its existence. But it now looks highly likely that Angela Merkel herself wasn’t in that loop. The view from the Chancellery yesterday was brutally clear: if the Greek government doesn’t find the €4bn saving shortfall (and it hasn’t yet) Merkel’s patience will be exhausted.
Angela’s patience is a very political one: Germany’s legislators and voters are all Greeked out. They won’t stand for any more backsliding or delays. Which is a toughie, because Samaras wants an extension of the austerity period, in order to ease the burden on ordinary Greeks.
Although this is all getting incredibly complicated, in one line, it comes down to this:
If Antonis Samaras goes on his tour of EU capitals next week with no aces up his sleeve, he will fail in his bid to get a repayment extension.
Samaras is a smart bloke – and his finance minister Yannis Stournaras is well connected internationally and diplomatically. The two men have been inseparable of late. There is a general feeling across my European and US contacts that what they’re doing is collecting aces….both inside and outside the eurozone.
Officially, the Israeli Ambassador to Greece Arye Mekel on Monday ‘briefed Finance Minister Yannis Stournaras on the interest of Israeli businesses in participating in the privatisations programme’. Actually, they discussed Israeli help in the event of a Greek insolvency and eurozone exit.
Officially, the US ambassador to Greece Daniel Smith yesterday to underline that ‘a new business and economic environment is a necessary precondition for the recovery of the economy and the creation of new job positions and attracting foreign investors to Greece ‘. Actually, Smith and Stournaras discussed plans already mooted by a Geithner envoy (who was at College with Stournaras in the States) for specific aid in return for energy rights and military bases.
Officially, Antonis Samaras is on holiday on the island of Pylos, to inaugurate the Marine Antiquities exhibition. Actually, although Samaras does have a residence there, security is abnormally tight. Some high-level talks have clearly taken place.
Officially, Samaras is in constant touch with his Coalition colleagues. But the reality is that the political party leaders backing the government will not see Samaras again before his meeting with Eurogroup Chairman Jean-Claude Juncker next week.
At the inordinately expensive Hilton Pool Club in Athens, regulars include quality press editors, MPs, cabinet technocrats, and bankers. The Hilton is 5 minutes drive from parliament, but represents a relaxing haven in which this elite can meet and gossip. It has always been a solid source of information for Greek insiders. In the last few months alone, the Troika, Shimon Peres, and Vladimir Putin have all been residents. This from a highly-placed member:
“Normally in August everyone is away. Not this year! Pool members leaving Athens this summer leave for only a few days. Very unusual. Institutions/papers are on hold, waiting; senior people are kept in town. Silence reigns, the same silence that accompanied the Drachma’s 50% devaluation in the 1950s. Poolside gossip this week mirrors The Slog very closely…the [Samaras] Pylos holiday is assumed to be very much a working one.”
By ‘mirroring The Slog’, my contact means ‘looking for aces in order to play for high stakes and win’.
The French diplomat quoted in last weekend’s Slogpost also remains convinced that Antonis Samaras is after the strongest poker hand he can get.
“Always the trouble with Berlin is, as I have told you many times before – who are we dealing with here and how influential are they? I don’t think Merkel has engaged with Samaras in secret at all. But I can tell you that France, Spain and Italy have.”
“The Israelis and ourselves remain close to the action,” a longstanding Washington source claims, “and the long-term strategy remains the same….to make more friends in South East Europe and the Middle East than we had traditionally. I can honestly tell you that Greece need suffer no fear of isolation, however this [debt crisis] pans out in the end”.
“Samaras trusts Stournaras, but not Venizelos,” says a well-placed Greek expat now living in the UK, “They are working in secret because they see Venizelos as Brussels’ man. Antonis is determined there will be no leaks, that he will not be caught at a disadvantage.”
It would be a mug’s game trying to predict the reaction in Berlin if and when Samaras plays an ace. But I suspect Angela Merkel will wind up between a rock and a hard place: that is, a choice between expensive Grexit and yet another compromise.