While the latest European FinMin summit desperately tried to put on a united facade when responding to the latest and greatest Greek proposal, which incidentally is so weak that the IMF will throw up all over it as shown below, the reality behind the scenes was anything but. In fact, Greece was this close to having capital controls forced on it earlier today, and would have, if the demand of not just its old BFF Germany's finmin Schauble, but Ireland's Noonan, had materialized.
As the FT reported moments ago, "Germany’s Wolfgang Schäuble and Michael Noonan, his Irish counterpart, pushed for curbs on emergency liquidity for Greek banks unless capital controls were imposed, one of the officials said.
And:
Eurozone finance ministers held an intense debate at their closed-door meeting over whether Athens should impose capital controls to stem the massive deposit withdrawals from Greek banks, three officials said.Mr Schäuble and Mr Noonan argued forcefully for limits on the amount of ELA approved by the central bank unless capital controls were introduced. But there was no decision on whether such controls were needed and ECB officials hit back, saying ministers should not be weighing in on monetary policy.
Because only the ECB is allowed to weigh in on political matters, such as deciding when to halt Italian bond purchases until Sylvio Berlusconi is replaced as Italy's prime minister.
This exchange must not have been pleasant for the Greek finmin, who "said such controls would be very difficult to enforce, noting that Greece is larger than Cyprus, the only other eurozone country to have required capital controls. “We’re not an island with no borders and one airport,” one official quoted Mr Varoufakis as saying."
Perhaps Yanis should not make it clear that any capital controls would be difficult to impose: next thing you know Panzers will be guarding the Greek border to prevent capital from fleeing.
As for the Greek proposal, which now will have to be voted on and passed not only in the Greek parliament but also in the Bundestag, there are different views. According to the FT, "people who have seen the latest Greek plan said Athens was proposing new savings in the pension system — the biggest sticking point between the two sides — which will amount to about 0.4 per cent of gross domestic product this year and just over 1 per cent next year."
This is vastly different from what Channel 4's Paul Mason tweeted also moments ago when he reported that the "Greek side of the deal" looks as follows:
- €8bn less austerity in this deal than in Troika programme over next 2 years
- No increase in VAT on electricity or medicines
- No public sector layoffs
- EKAS - pension supplement - kept...
- "Fiscal targets high and we question their necessity. However for the first time we hit them by making those who have, pay their share"
- Zero-deficit clause on pensions not implemened
- €800m raised by restoring “employment contribution” to 2014 level
- 3.5% and 4% surplus reduced to 1% and 2%.
- No mention of debt yet.
Or, none of the pension cuts demanded by the IMF which is how Syriza will try to pass the proposal in parliament - as a confrontation with the IMF which the Greek negotiators won - where it may well fly (even without a pledge of debt reduction by the Troika), however said bullet point will be a dealbreaker for both the IMF and Germany.
As such, the reality is that despite all the rhetoric, nothing at all has changed following today's spectacle, and the only tangible difference Greece is that Greek banks have €2 billion less in deposits, which makes one wonder: all this stalling crushing Greek bank solvency, merely assures that the Goldman "conspiracy theory" in which the ECB ultimately does want a Greek default, just not the blame for it, is one day closer to coming to fruition.
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