Thursday 28 May 2015

Tax on ATM Withdrawals cancelled 3 hours after it is announced

Apparently less than three hours after it was announced by Minister Varoufakis, the Ministry of Finance withdrew the idea of taxing cash withdrawals from ATMs. (see for instance Reuters: Greece says ATM levy, bank transaction tax no longer being discussed / 26 May 2015). 

This policy reversal is only the latest of a series of similar actions that drastically limits confidence and leads many to question whether SYRIZA has any control on basic policy making. 

These fears have increased in the face of a public relations offensive in the last two days, which had Greek government officials claiming that the agreement with creditors was in sight, and even that “the final agreement is being written). 

These claims have been dramatically repudiated by various Eurozone parties in the last 36 hours. 

European Commission insiders are insisting that Greece is NOT, repeat NOT, on the brink of a deal, despite Tsipras’s optimistic comments.

One official has told Reuters that the remarks coming out of Athens are “nonsense”.
Another said: “I wish it were true.”

Reuters also has the full rebuttal from European Commission Vice President Valdis Dombrovskis. He said: “We are working very intensively to ensure a staff-level agreement. We are still not there yet.”

Jean Claude Juncker has stated things quite succinctly in recent comments reported in the Guardian and other media: 

 “He is not helping the process. Mr Varoufakis is the finance minister of a country that has to confront huge problems and he doesn’t give the feeling that he knows that.” These comments from the EC president to the MNI news agency have caused a stir with every major news outlet leading on Jean Claude Junker’s indictment of the Greek finance minister.

“Essentially, Mr Juncker with his response is accusing Mr Varoufakis as the reason why negotiations aren’t moving forward,” the news portal wrote this evening.

While insisting that he could trust Greek prime minister Alexis Tsipras, the EU chief’s description of his radical left Syriza party as “abnormal” has also sent tremors through the political scene.

Meanwhile, the Tsipras’ government issued a non-paper tonight saying today was spent reworking “different issues so that precious time isn’t lost.”

Not many in the EU would agree with that.

One EU official recently said: “if we go at the speed the Greeks are negotiating the process will conclude in April 2017.”

It is increasingly clear that events relating to the Greek debt negotiations over the past two weeks have been increasingly driven by domestic political calculations, and mainly the need to arbitrate political responsibility for the termination of SYRIZA’s “September Programme” and the subsequent “SYRIZA Somersault”. 

As a result, while I continue to believe a deal will be struck, it is difficult to say when this will in fact occur, and whether this will occur by the date of the next debt repayments. 

Even assuming a deal is struck and € 7.2 billion in Bailout II funds are finally released, Greece’s financing needs are much greater between July – December 2015, as is widely acknowledged. 

Political instability is therefore set to continue throughout 2015 and very likely into 2016 as well. 

© Philip Ammerman, 2015 

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