Brussels, 21/08/2015 (Agence Europe) - The day after the resignation of the Greek Prime Minister, Alexis Tsipras, and of his government, the European Commission said that it was not surprised by this decision. Early general elections will be held in Greece, most likely on 20 September.
“This is no surprise, it is what we were expecting”, following many telephone calls between the President of the European Commission, Jean-Claude Juncker, and Alexis Tsipras, but also Prokopis Pavlopoulos, the President of Greece, Commission spokesperson Annika Breidthardt explained on Friday 21 August.
However, the Commission declined to comment further on the 'timing' of these telephone conversations between Brussels and Athens and, amongst other things, to state whether Juncker had been aware of Alexis Tsipras' imminent decision when the aid plan was approved by the Eurogroup. As long ago as July, however, public comments by members of the Greek government indicated the possibility of early elections.
Breidthardt went on to explain that the Commission had no concerns for the implementation of the programme as a result of the announcement of early elections in Greece. The reforms have already been voted through and, irrespective of the elections, “can be implemented now” without the need for any new political decisions, she explained. She went on to state that the next wave of major reforms was scheduled for October. The Commission also notes that the financial assistance plan was approved by opposition parties on Friday 14 August, which indicates broad political support.
The Greek press sees Tsipras' decision as a way of consolidating his position - he remains highly popular in Greece - and to put the Syriza party in order. Some 20 Syriza MPs left the party on Friday to form a new party, 'Popular Unity', which will be led by the former energy minister, Panagiotis Lafazanis, on an anti-financial assistance plan ticket. The party states that it is prepared to respect the outcome of the June referendum, in which the Greeks rejected the reforms on the table. “If it is necessary for us to cancel the referendum”, we will follow the course of exiting the euro, said Lafazanis, quoted by the Greek daily newspaper Kathimerini.
The New Democracy party, the runner-up in the elections of 25 January of this year, initially plans to try its luck. Its leader, Evangelos Meimarakis, announced on Thursday evening his intentions of trying to form a government in order to avoid early elections. They intended to hold discussions with all of the opposition parties and to approach the party of Greek independents, a member of the government coalition, according to reports in the Greek press, which does not appear to have too much faith in the chances of success of such an initiative.
ECB paid back on time again. On 20 August, the ECB announced that it had received the reimbursement of Greek obligations to the amount of €3.2 billion. This was made possible by a first payment from the European Stability Mechanism (ESM) following the approval of the Eurogroup to the third bailout plan on Friday 14 August, and the green lights given by the national parliaments.
Around €7.2 billion of this amount was used to pay back the bridge financing granted in July by the European Financial Stability Mechanism (EFSM), a fund managed by the Commission on behalf of the Twenty-Eight (see EUROPE 11363). A further €10 billion were transferred into a separate account for any banking requirements. Stress tests will be carried out in the autumn on the Greek financial institutions. The Eurogroup is already warned that the 'senior' creditors may be asked for a bail-in, but savings will not be touched in the process of recapitalising the banks. Danièle Nouy, president of the Single Supervision Body for the Greek banks within the ECB, explained on Finnish radio that the banks were getting over the current crisis. “Political events have of course weakened the banks, but the crisis did not start from the banks”, she explained.
The ESM will disburse a further tranche of €3 billion in the autumn, bringing this first tranche of aid to €26 billion. The total value of the bailout plan will stand at €86 billion, but the ESM will not be providing the whole of this amount on its own, as the eurozone is counting on the revenue generated by privatisations, the IMF coming on board and Greece's future access to the financial markets. The IMF will announce its decision in the autumn, after the first monitoring mission of the third programme and discussions on reducing the Greek debt.
The eurozone will discuss the Greek debt in the autumn, but for now will be focusing on the servicing of the debt, with the targets of November 2012 having been laid down in terms of debt/GDP ratio. We will be setting new ones, said the French minister, Michel Sapin, at the Eurogroup meeting on 14 August. Analyses forecast that the Greek public debt will be viable for a long period, but that problems could crop up later, Jeroen Dijsselbloem, Eurogroup president, explained.
Analysis of the social impact of the programme. The Commission has been as good as its word: it has provided an analysis of the social impact of the adjustment programme (see EUROPE 11364). According to the results of this, if the reforms are implemented in full and in due time, the measures of the programme will bring Greece back to “stability and growth, in a financially and sociably viable way”. The primary budgetary surplus targets, not including debt servicing, have been reduced to 0.25% for this year and 0.5% in 2016, from a target initially set at 1% for this year.
It is also worth noting that according to the French daily newspaper Le Monde, Alexis Tsipras has asked the European Parliament for its “full and direct involvement” in the monitoring of the application of the third bailout plan, without providing any more details on the nature of this involvement. (Elodie Lamer)