On Sunday, Greek Finance Minister Yanis Varoufakis flew to Washington on an unscheduled trip, where he met International Monetary Fund (IMF) Managing Director Christine Lagarde.
Varoufakis’ trip was to assure Lagarde that the Syriza-led government will pay a €450 million loan repayment to the IMF due Thursday.
There had been growing speculation that Greece might not make the payment. Greece would have become the first advanced Western country to miss a repayment to the IMF, thus threatening to trigger a default on its debt of more than €315 billion. Figures within the Greek government had warned that Greece could run out of euros as early as April 9. At the weekend, Kostas Chrysogonos, a prominent Syriza member of the European parliament, said that failure to reach an agreement could result in a snap general election being called.
Following two hours of talks, Varoufakis said they had been “extremely productive” and that Greece “intends to meet all obligations to all its creditors, ad infinitum”.
Syriza is “intent upon reforming Greece deeply,” he added.
Even as the IMF, European Union (EU) and European Central Bank (ECB) tighten their financial stranglehold over Greece, cutting its government and banks off from international money markets and standard ECB funding, Syriza’s first priority remains to pay them off.
The upcoming €450 million payment to the IMF was treated in much of the media as critical to a resolution of the entire debt crisis. The reality is this payment is a drop in the ocean, even in terms of the overall debt Greece owes just to the IMF, let alone its other creditors.
More than €9 billion must be paid back to the IMF this year alone. Other debt repayment is imminent. On Wednesday Athens must also refinance €1.4 billion of Treasury bills, (very short-term debt), due for repayment the following week.
On Friday, the Telegraph quoted an unnamed Greek government source who said Athens is drawing up contingency plans for the launch of a new parallel currency. “They want to put us through the ritual of humiliation and force us into sequestration. They are trying to put us in a position where we either have to default to our own people or sign up to a deal that is politically toxic for us. If that is their objective, they will have to do it without us,” said the source.
The newspaper said that the plans were being considered, “even though Syriza would rather reach an amicable accord within EMU [European Monetary Union]”.
Varoufakis discussed with Legarde the latest austerity measures drawn up by the government. Greece must have its proposals accepted by the EU, ECB and IMF as a condition for receiving further loans, including an outstanding €7.2 billion required to make any further debt repayments and satisfy the terms of the four-month austerity extension agreement signed on February 20. Every proposal made since then has been rejected as having not sufficiently accelerated the assault on the living standards of the working class.
Varoufakis stressed his government wants a deal in place by the next meeting of European finance ministers in Riga later this month. On Monday he told Greek daily Naftemporiki, “At the Eurogroup [meeting] of April 24 there must be a preliminary conclusion (of the talks), as per the Eurogroup accord on February 20.”
Legarde said that Varoufakis expressed his “commitment to improve the technical teams’ ability to work with the authorities to conduct the necessary due diligence in Athens, and to enhance the policy discussions with the teams in Brussels, both of which will resume promptly on Monday.”
The role of the technical teams is to lay the basis for an overall austerity deal to be finalised in June.
On Monday, Varoufakis followed up his meeting with Lagarde by holding discussions with US Treasury officials.
Varoufakis’ trip to the US was organised just days before Syriza Prime Minister Alexis Tsipras’ Wednesday meeting with Russian President Vladimir Putin in Moscow. Prior to February’s agreement, US President Barack Obama expressed his concern that Greece’s ongoing economic crisis was a major destabilising factor in the region. Greece plays a pivotal role as NATO’s southernmost flank in Europe. With NATO ratcheting up its provocations against Russia and China, the US is concerned over Syriza’s declared intention to forge closer ties with both those countries.
On Sunday, the leader of Syriza’s Left Platform, which represents about 30 of its 149 parliamentary deputies, said Greece’s creditors were treating it with “unbelievable prejudice and as a colony”.
Panagiotis Lafazanis, as energy minister, has just returned from a trip to meet high level Russian government and business figures. He added, “A Greek-Russian agreement would help our country greatly in negotiations with lenders.”
Syriza is seeking to use Greece’s geostrategic importance in order to exploit antagonisms between the US, Europe and Russia.
Shortly after Syriza’s election, Tsipras invited a Chinese government delegation to Athens. A Greek government mission was warmly received in China last month, during which a “China-Greece maritime cooperation year” was launched. China has extensive investments in the Greek port of Piraeus, and the deal was the first ever maritime agreement between the two countries.
The talks between Tsipras and Putin are to cover all aspects of policy, particularly Greek-Russian energy cooperation. Tsipras is visiting Moscow again, on May 9, as part of events held to commemorate Russia’s defeat of Nazi Germany in World War II. Last week, Tsipras said Greece was opposed to a continuation of EU sanctions against Russia over Ukraine.
On Friday, Kremlin spokesman Dmitry Peskov said, “Relations between Moscow and the European Union will be discussed in the light of Brussels’ policy of sanctions and Athens’ quite cold attitude to this policy.”
Tsipras’ trip has caused consternation between Greece and the EU. German news magazine Spiegel published a report this weekend citing the comments of German European Parliament President Martin Schulz to a German newspaper. Schulz warned the Greek government that Greece should not jeopardise its ties with the EU by seeking Russian support.
Spiegel also cited the comments of Gunther Kirchbaum, a senior figure in Chancellor Angela Merkel’s governing Christian Democratic Union who warned, “Whoever needs help should turn to Brussels and not Moscow.”
An article in Monday’s Financial Times, centring on the implications of Greece’s turn to Russia, summed up the concerns in ruling circles. It stated, “The big fear, in the words of one suspicious senior [European] official, is a ‘Trojan horse’ plot, where Russia extends billions in rescue loans in exchange for a Greek veto on sanctions—a move that would kill western unity over Ukraine.”
The FT warned, “No such shock is expected this week. But as Athens nears the brink of insolvency there is growing alarm that Mr Tsipras’s radical left government might turn to Moscow in desperation. It would set off the biggest panic over Greece’s strategic alignment since the 1947 US Marshall Plan, initiated to save the country from communist fighters that Mr Tsipras’ Syriza party lionise to this day.”