Πηγή: New York Times
By HUGO DIXON | REUTERS
Jan 11 2015
The possibility of a bank run is Greece’s Achilles’ heel.
The country probably won’t be forced out of the euro. But there is a scenario in which this could happen. If Syriza, the radical-left party, wins the coming election, then runs out of time before it can perform the U-turn necessary to keep its creditors happy, depositors might panic.
Syriza is the clear favorite in the elections on Jan. 25. If it emerges victorious, it could be heading for a clash with its eurozone creditors. The party has promised to cut Greece’s debt and increase public spending, but it will not be able to get an agreement to do this.
Germany, which drives eurozone policy, is not too afraid of financial contagion if Greece defaults on its debts and quits the euro. Berlin is more worried about the political contagion if it cuts Athens too much slack. Other countries, especially France and Italy, might then go slowly with their own economic overhauls.
This is not to say that Greece does not deserve some form of extra debt relief if it keeps up its overhaul efforts. Encouragingly, Syriza has promised much-needed crackdowns on tax evasion and oligarchs. The snag is that it will be politically almost impossible for its creditors to cut the headline debt level.
The obvious compromise — the rough parameters of which have already been discussed between the current government and the eurozone — is to fix the interest rate at extremely low levels and extend the grace period before any of the loan has to be repaid.
Could Syriza accept such an approach to the debt? Could it also agree to refrain from a spending splurge?
Possibly, given enough time. But there is no doubt that it would involve a somersault, or what the Greeks call “kolotoumba.” Many of its activists would view this as a betrayal of everything they stand for.
What is more, Syriza thinks it can play hardball. A common theory is that because Greece now has a budget surplus before counting interest rates, Athens could default unilaterally on its debt and keep the show on the road.
Doing so would be a dangerous folly. While the government could indeed fund itself if it refused to pay its debt, a default could provoke panic among bank depositors. In such a scenario, the European Central Bank would no longer provide liquidity to Greek banks — making a bank run rational.
Indeed, the central bank fired a warning shot last week, saying effectively that it would no longer act as a lender of last resort to the country’s banks after the end of February, unless Athens secured an extension of its current bailout program, which runs out then.
Greece’s own central bank may still be able to supply what is known as “emergency liquidity assistance” if needed. But the E.C.B. would probably veto this too if a new government were not at least seriously negotiating an extension of the program.
If there were a bank run without a safety net, the government’s only option would be to impose capital controls. Unless it then appealed to its creditors for mercy, it would have to bring back the drachma.
Athens’ own finances are also stretched because it has not agreed to the latest demands of its creditors, and so it has not received the last dollop of bailout cash. Unless it can scrape together cash from somewhere, it will run out of money by the end of February.
All this means that if Syriza wins the upcoming election, it will immediately be under extreme time pressure. Its first priority, to form a government, will not be easy because it is unlikely to have an overall majority. Syriza would have to secure a coalition, and its most obvious partner, the centrist To Potami movement, is adamant that it won’t agree to a deal that could put Greece’s membership of the euro at risk.
To Potami should stick to its hard line. Among other things, this would mean insisting that Syriza ask nicely for an extension of the bailout plan. To get this, it would have to agree in broad terms to the program that it has spent years denouncing.
This would require a rapid kolotoumba from Syriza’s leader, Alexis Tsipras. That is why it is quite possible that there will be no coalition deal, and a second election will be called for late February or early March.
By that stage, the heat would really be on. The end-of-February cutoff of E.C.B. support would either have passed or already be looming. Deposit flight could also have taken off, if the experience of 2012, when a bank run started between that year’s two elections, is anything to go by.
If there is a second election this time, the priority of the caretaker government that would run the country in the intervening period should be to ask for at least a short extension of the program until a proper government was formed.
But the top priority now is for the eurozone creditors and the moderate elements in Syriza to put out feelers to one another to work out how the party could perform a kolotoumba without too much of a loss of face. The creditors should indicate that they would extend the bailout deal so long as Syriza asked for one nicely. After all, it is in nobody’s interest for Greece to be driven out of the euro.
Hugo Dixon is editor at large of Reuters News.
The possibility of a bank run is Greece’s Achilles’ heel.
The country probably won’t be forced out of the euro. But there is a scenario in which this could happen. If Syriza, the radical-left party, wins the coming election, then runs out of time before it can perform the U-turn necessary to keep its creditors happy, depositors might panic.
Syriza is the clear favorite in the elections on Jan. 25. If it emerges victorious, it could be heading for a clash with its eurozone creditors. The party has promised to cut Greece’s debt and increase public spending, but it will not be able to get an agreement to do this.
Germany, which drives eurozone policy, is not too afraid of financial contagion if Greece defaults on its debts and quits the euro. Berlin is more worried about the political contagion if it cuts Athens too much slack. Other countries, especially France and Italy, might then go slowly with their own economic overhauls.
This is not to say that Greece does not deserve some form of extra debt relief if it keeps up its overhaul efforts. Encouragingly, Syriza has promised much-needed crackdowns on tax evasion and oligarchs. The snag is that it will be politically almost impossible for its creditors to cut the headline debt level.
The obvious compromise — the rough parameters of which have already been discussed between the current government and the eurozone — is to fix the interest rate at extremely low levels and extend the grace period before any of the loan has to be repaid.
Could Syriza accept such an approach to the debt? Could it also agree to refrain from a spending splurge?
Possibly, given enough time. But there is no doubt that it would involve a somersault, or what the Greeks call “kolotoumba.” Many of its activists would view this as a betrayal of everything they stand for.
What is more, Syriza thinks it can play hardball. A common theory is that because Greece now has a budget surplus before counting interest rates, Athens could default unilaterally on its debt and keep the show on the road.
Doing so would be a dangerous folly. While the government could indeed fund itself if it refused to pay its debt, a default could provoke panic among bank depositors. In such a scenario, the European Central Bank would no longer provide liquidity to Greek banks — making a bank run rational.
Indeed, the central bank fired a warning shot last week, saying effectively that it would no longer act as a lender of last resort to the country’s banks after the end of February, unless Athens secured an extension of its current bailout program, which runs out then.
Greece’s own central bank may still be able to supply what is known as “emergency liquidity assistance” if needed. But the E.C.B. would probably veto this too if a new government were not at least seriously negotiating an extension of the program.
If there were a bank run without a safety net, the government’s only option would be to impose capital controls. Unless it then appealed to its creditors for mercy, it would have to bring back the drachma.
Athens’ own finances are also stretched because it has not agreed to the latest demands of its creditors, and so it has not received the last dollop of bailout cash. Unless it can scrape together cash from somewhere, it will run out of money by the end of February.
All this means that if Syriza wins the upcoming election, it will immediately be under extreme time pressure. Its first priority, to form a government, will not be easy because it is unlikely to have an overall majority. Syriza would have to secure a coalition, and its most obvious partner, the centrist To Potami movement, is adamant that it won’t agree to a deal that could put Greece’s membership of the euro at risk.
To Potami should stick to its hard line. Among other things, this would mean insisting that Syriza ask nicely for an extension of the bailout plan. To get this, it would have to agree in broad terms to the program that it has spent years denouncing.
This would require a rapid kolotoumba from Syriza’s leader, Alexis Tsipras. That is why it is quite possible that there will be no coalition deal, and a second election will be called for late February or early March.
By that stage, the heat would really be on. The end-of-February cutoff of E.C.B. support would either have passed or already be looming. Deposit flight could also have taken off, if the experience of 2012, when a bank run started between that year’s two elections, is anything to go by.
If there is a second election this time, the priority of the caretaker government that would run the country in the intervening period should be to ask for at least a short extension of the program until a proper government was formed.
But the top priority now is for the eurozone creditors and the moderate elements in Syriza to put out feelers to one another to work out how the party could perform a kolotoumba without too much of a loss of face. The creditors should indicate that they would extend the bailout deal so long as Syriza asked for one nicely. After all, it is in nobody’s interest for Greece to be driven out of the euro.
Hugo Dixon is editor at large of Reuters News.
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