Tuesday, July 7, 2015

Deadlines: Greek Debt Negotiations & P5+1 Talks

So we're back to deadline watch in the Greek debt drama. The new make-or-break deadline we're supposed to stay focused on is July 20. That is when 3.5 billion euros that Greece owes to the European Central Bank comes due. If Greece fails to make repayment by July 20, the ECB will be hard pressed to find a way around cutting off liquidity to already cash-strapped Greek banks.

James Kanter publishes a helpful story this morning, "Greece Expected to Offer Proposals as Eurozone Leaders Prepare to Meet," that precedes yet another emergency summit of eurozone leaders in Brussels today. Kanter tilts towards the neoliberal consensus. So his writing is a helpful prism to understand how the U.S./EU elite view recalcitrant Greece:
BRUSSELS — The Greek government was expected to make proposals to eurozone leaders on Tuesday to support its battered economy and keep the country in the single currency area, as Athens and its creditors resume their struggle over an elusive solution to Greece’s long-running economic crisis. 
But a quick fix for Athens looked extremely difficult to achieve. The stakes were rising on Tuesday ahead of the latest emergency summit meeting of European leaders. None of them wants to take the blame for a possible sudden, chaotic departure from the eurozone by Greece. That means that all sides could agree to keep talking even as the crisis reaches new levels of intensity, and even as Greece hurtles toward a deadline — a payment of 3.5 billion euros, or about $3.9 billion, to the European Central Bank on July 20 — that most observers think it cannot miss without leaving the eurozone.
The Eurogroup of finance ministers is scheduled to convene at 1 p.m. in Brussels, followed by an emergency summit meeting of the 19 leaders of eurozone countries at 7 p.m. that is expected to include Mario Draghi, the president of the European Central Bank, and Jeroen Dijsselbloem, the president of the Eurogroup.
A failure to make good on the July 20 bailout payment to the European Central Bank would make it almost inevitable that Greece would have to cut a lifeline for the country’s cash-drained banks. And that could force the country to print a parallel currency that would hasten its departure from the currency bloc. 
That prospect could add pressure on the Greeks this week to commit to a number of short-term changes for bridge financing to avoid defaulting on the European Central Bank, and then conclude a wider program, with debt relief, later in the year. 
But one analyst emphasized on Tuesday that the track record of the government in Athens would make it extremely difficult to take any of its commitments at face value. 
“It remains very unclear whether the Greek government is really trying to avoid an exit from the euro area, or whether it only wants to avoid being held responsible for it by its domestic public opinion,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels.
I used to be of the opinion that what Tsipras was up to was transforming consciousness in Greece -- enlightening the Greek voter -- to accept the reintroduction of the drachma. But I no longer believe that. I think that Syriza, true to what Tsipras and Varoufakis have long said in public, has no intention of leaving the eurozone. The strategy of Tsipras has been to wear down the members of the troika, and in this he has been successful. France has moved away somewhat from Germany. The IMF has broken with other members of the troika and issued a report declaring Greece's debt load unsustainable.

The problem for Tsipras is that despite the landslide "Oxi" win, the July 20 ECB repayment deadline looms large. For the hardliners in the Eurogroup who want to collapse Greek banks and be done with it, two weeks is a short time to wait. There is no need for Schauble and Dijsselbloem to offer any concessions, particularly on debt forgiveness. It appears that Tsipras will run out of time and no cavalry will ride over the hill to the rescue.

And not one but two deadlines have now been breached in the P5+1 talks in Vienna: first, the June 30 deadline, and today's July 7 deadline. The significant one for Kerry and Obama is Thursday July 9. If no agreement is reached with Iran on its nuclear program in two days then the U.S. Congress will get an additional 30 days to skewer the agreement. USG scribe Michael Gordon reports in "Iran Nuclear Talks Are Extended Once Again":
VIENNA — The talks to complete a landmark accord limiting Iran’s nuclear program have been extended for several days after negotiators acknowledged that they would be unable to meet a Tuesday deadline.
To give negotiators more time to pursue a final accord, the diplomats agreed to extend through Friday an interim nuclear accord called the Joint Plan of Action. That interim agreement, which had been set to expire on Tuesday, freezes much of Iran’s nuclear program in return for modest sanctions relief.
“We are continuing to negotiate for the next couple of days,” Federica Mogherini, the foreign policy chief for the European Union, told reporters here.
This is the second time the talks have been extended since Secretary of State John Kerry arrived here in late June. The original goal was to complete a final accord by June 30.
Ms. Mogherini said that the negotiations had entered “a difficult and sensitive” phase, but she did not discuss the remaining issues.
The unresolved issues in recent days have included what limits would be placed on the development of more efficient types of centrifuges after the first decade of an accord, what steps would be taken to address suspicions about Iran’s past nuclear activities, and the timeline for removing sanctions.
The Obama administration hoped to finish the accord by Thursday, so that it could be submitted to Congress for a 30-day review. If the agreement is finished this summer, the duration of the review period will double.
I don't see Obama walking away from the table. He wants an agreement, not only for his "legacy"
but for the future electoral viability of the Democratic Party. Not much is made of it in the media, but the Democrats' nominal association with a less bellicose foreign-policy perspective is a huge vote-getting advantage. A Democratic administration does not want to squander this.

But give the media monopoly and a Saudi- and Israeli-dominated Congress two months to inveigh and fear-monger, and the chances are high any agreement will be scuttled, which puts the feckless Obama in the difficult position of having to veto a Congressional override to protect his "legacy" agreement. 

It is hard to say at this point which is a stronger character trait in Obama: his desire to go-along-to-get-along or his lust to be inscribed in the history books. Probably the latter. So maybe there is hope for a Iranian nuclear accord after all.

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