20 Feb 2012

Dutch drop downer on europhoria

Brussels, 1700

I have just spoken to the Dutch finance minister Jan Kees de Jager, on his way in to today’s euro group meeting. Mr de Jager’s comments to me in English and some in Dutch made just before caused a marked popping of the europhoria bubble and a sharp move in the foreign exchange markets.

He said that he, personally, favoured a “permanent Troika presence” in Athens to see through the deal, which basically means, after a planned Greek election in April. Anti-austerity parties are on the rise in Athens. This type of presence would contrast with the current quarterly inspections of the IMF/EU/ ECB.

This backed up a more sober account of the difficulties likely today and in the coming weeks that he told to me: “Each side has to assess whether Greece has done enough. It was not so last week. It was also not so the week before… Also necessary in the next two weeks, Greece will have to implement in law, some of the prior measures the IMF required.”

I’m sure all this will go down very badly with Greeks, and with the finance minister Mr Venizelos, though perhaps less badly with Prime Minister Papademos, who is also here. Mr de Jager told me his reasoning.

“When you look at the derailments in Greece, that have occurred several times now, it’s probably necessary that some kind of permanent presence of the Troika in Athens, not every three months, but more on a permanent basis, I’m in favour of it”.

Another journalist, from Spain, asked if Mr de Jager wanted the permanent troika in Athens to be able to veto Greek budgets. His reply was rather interesting, a crucial insight into what exactly some in the eurozone elite want of Greece. I present it verbatim:

“Of course a country remains to some extent always sovereign, but it’s very important that the international community, when you loan money, that you are the boss of loaning money, whether or not you will disburse the next tranche, that’s why I’m in favour of a more permanent mechanism of the Troika, but I’m also in favour of an escrow account where the money is disbursed above first, and then from that escrow account we have more certainty whether or not the money is disbursed from then on…

“Then you also can give in some cases priority to debt service, to repayments and interest payments on Greece’s debt compared to national expenditures of the government itself. So yes I’m in favour of more control, more supervision, a more permanent presence of the troika, as well as a kind of escrow mechanism, in order to establish more control in Athens of the money itself. Because the money is the thing probably we can control Greece best.”

(It’s not just the Dutch, I also spoke to Belgium’s new finance minister Steven Vanackere, who told me that Greece had done its homework, but needs to continue “doing its homework in the weeks and months to come… The whole question of monitoring is a crucial factor in maintaining confidence of euro-colleagues”).

So Greece probably right now, is being asked, to pass laws within two weeks to adhere to IMF requests, to subject itself to¬† long term presence of internal inspectors, to have an escrow account that prioritises debt servicing above other national expenditures of the Greek government, all to establish “control”. Everybody is talking a good game here to get the “deal done” headlines tomorrow, and scare off some New York hedge funds.

The underlying issue, which that the rich north Eurozone, does not trust Greek democracy to enact this deal: well that seems to remain.

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