1 Jul 2015

Greece debt crisis: Tsipras prepares for compromise deal

I’m outside the Maximos Mansion in Athens where Prime Minister Alexis Tsipras is getting ready to stage a climb-down and he will tell them he’s about to accept something very very similar to the conditional bail out he rejected on Friday.

And the reason is clear, what six months of political pressure and diplomatic fighting haven’t produced in Europe, five days of financial terror have produced.

Because, this morning, not only were Greeks queuing at ATMs but also pensioners queuing for their pensions, €120 they’re allowed to take out. And there’s the bigger problem with tax receipts drying up, where do next month’s pensions come from?

We’ve seen, for the second time in three years, a modern economy brought to its knees by a central bank that is supposed to safeguard financial stability but actually switching off financial stability in the name of enforcing tough austerity rules.
First Cyprus and now Greece.

But in Greece, Greece is ruled by a far left government. Greece’s far left government has resisted until the very last, and however Tsipras tries to sell this, it will be seen by his supporters as a climb-down.

It will confuse people because they were getting ready to vote no to these conditions, in a referendum that he had called. And even now, this morning, after all the pressure and all the demonstrations by the centre-right and conservative parties, as of last night, the majority of people in opinion polls are saying they would vote no, they would reject these conditions.

So what’s changed is not the politics, what’s changed is the financial reality.


The European Central Bank has proved, yet again, that it can crash an economy if it wants to.

And that is what is has just done. What happens to Tsipras and his party, who knows? Because their strategy was to negotiate, to get the best deal, but the best deal had to include the debt.€320bn debt, every independent analysis says, is unpayable in an economy that cannot grow.

The austerity measures he’s about to sign up to will depress economic growth further so the debt ratio to GDP will rise and the German taxpayers and the Austrians, Slovakians, and the Fins who don’t like Tsipras will go on complaining about Greece and the Greeks because there is a very very little chance they will get all their money back.

Anger and dissolution

But as for them, here there will be anger, dissolution, dismay among the people who have thronged to the streets to support Alexis Tsipras. But then what next? If he goes on with the referendum, we will find out in a minute, how will he vote? He will have to now recommend a yes vote.

If he cancels the referendum he will be accused by his own supporters of bottling out. If he resigns and calls elections, he is still likely to win so the party has to govern and run and implement a programme it doesn’t agree with.

Follow @paulmasonnews on Twitter.