Download Greece, will there be a miracle from Zeus?

Greece, will there
be a miracle from
Zeus?
th
Year 2015 - July 6 - No. 716
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Greeks need a miracle from Zeus to change the
situation they have generated.
Beware with delaying the problem, it would be
really dangerous.
The miracle will not come directly from The
Olympus, but via Berlin, Brussels, Moscow or
Beijing.
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as the source is cited: Consultores Internacionales, S.C. ® (CISC).
Given the decision of the Hellenes about
do not accept the conditions that
creditors impose in order to rescue their
battered economy, the questions point
about how the various financial interests
of the world will move: What will
Germany and Britain do? What is the
position of Russia? Where is China in
this environment? Will they support
Greece? The answers depend on the interests that they pursue. For now, it would seem
that Athens can only invoke Zeus for a miracle, which will not come directly from
The Olympus, but from Berlin or Brussels, Moscow or Beijing.
The decision of not accepting to continue receiving international funding in exchange for a
strict policy of adjustment, certainly reinforces the political role of the Prime Minister Alexis
Tsipras-who promoted the "no" even with the threat that the Greeks would lose their labor
benefits - but it moves to a serious strain to the Greek economy and its future viability.
With the "no", the Greek government apparently has the mandate of his people about not
to accept the conditions which would imply discipline and austerity, and, also, to negotiate
the new ones which has already been announced, in order to make them more lax and are
focused on to "release the debt" and bank capitalization. The challenge now is to have
the troika and the Eurogroup accept these conditions, which really sounds very
difficult, especially if Greece is not willing to give up something.
Given this inflexibility, the first decision that has been taken is the resignation of the
Finance Minister Yanis Varoufakis, who supports the Prime Minister, whom has labeled
the conditions they want to impose as “terrorists,” and the Eurogroup as an "enemy of
democracy.” His resignation, however, is not a response to the "no,” but, to the "We do not
want to negotiate with you" that creditors have expressed.
On July 20th, Greece must pay 3.500 billion euros to the European Central Bank (ECB),
but if an agreement is not reached, it would enter into default, as it did with the IMF, to
which did not pay the 1.600 billion euros. The situation, though still not has financial
consequences, is an issue that will worsen over time.
Now the Hellenes banks are undercapitalized, since much of their capital depends on
assets guaranteed by the state, so that the requirements of creditors to obtain liquidity will
be even more complicated, leading to their collapse if they open. With the outcome of the
consultation, direct recapitalization by the ESM gets canceled because the program
involves accepting the conditions the Government and the people now refuse to accept, so
it is likely that banks will remain closed.
The other possibility for recapitalization is that the country leaves the euro and starts
issuing drachmas, or at least hold a parallel currency. The exit of Greece from the
Eurozone is a possibility but, first, it would have to resort to another query, but will require
to be very clear on the "advantages" and "disadvantages" of it; It is not trivial.
Greece now has the need to seek alternative sources of financing given the impossibility of
reaching an agreement with the European Union. The choices are United States, China, or
Russia.
In this context, this week's BRICS Summit VII (8 and 9 July) in Ufa (Russia), where the
issue of Greece will be touched represents a key element for the country’s future. The
meeting will have a special tone as it is the first to be held under the framework of the New
Development Bank (BRICS’ bank) whose creation was agreed last year. This could be a
salvation for Greece's finances since in late May; Russia extended an invitation to the
Greek government to join the bank. Both China and Russia see the issue of Greece as a
new opportunity to extend its influence onto the West.
China and Greece have explored mechanisms for greater financial cooperation. The
parastatal Cosco has controlled since 2009 the emblematic port of the Piraeus thanks to a
35 years-concession; since then, China's investment in this port exceeds one billion
dollars. It should be added the commitment that the Chinese government has done in the
Eurozone and Europe, with big capital invested in euros, so it is expected that China is
interested in the continuity of Greece in the euro, since the exit of a member from the
single currency scheme, could be seen as a sign of weakness that could affect the
strength of the currency, reflecting in Chinese investments having a lesser value.
With the outcome of the consultation, the situation of the Greek economy undoubtedly
worsens, or at least enters a "stalemate.” Not wanting discipline has its consequences in
the medium and long term and expecting a bailout with no quid pro quo is a very
comfortable position; it is to delay the problem leaving these costs to future
generations, which is very dangerous.
In parallel with the financial implications of the Greek crisis, Greece can become a
critical piece in the geopolitical rearrangement that is experiencing the world,
therefore a possible rescue (no matter where it comes from) could be the result of a
political decision rather than an economic one.
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CISComentario D.R. is a weekly publication from: Consultores Internacionales, S. C. ®
Lic. Julio A. Millán B., President; Ing. Mauricio Millán C., Vicepresident. MDI. Maribel Rodríguez, Associate Director.
Analysis: Mtro. Sergio Garduño. Edition Coordinator: Lic. Patricia Gordillo.
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