Grexit -- There Is No Alternative

Yesterday ("Deadlines Near as Greece and Germany Seek a Consensus on Debt" by Alison Smale) leftist Greek prime minister Alexis Tsipras was in Berlin meeting with rightist German chancellor Angela Merkel trying to find a path forward out of the funding impasse between Greece and the troika.

Naked Capitalism's Yves Smith ably adumbrated ("Leaked Tsipras Letter to Merkel Shows Increased Desperation, Warns of Imminent Default") the impasse as follows:

If the plan of the Troika was to starve the Tsipras government and produce either capitulation or a loss of domestic credibility, their effort appears to be on track.

FAZ reported that the Greek government is set to run out of funds by April 8. Tonight, the Financial Times reports that Greek prime minister Alexis Tsipras sent a desperate-sounding letter to Angela Merkel on March 15. That appears to have led Merkel to meet with him at an EU conference last week and arrange for a one-on-one session tomorrow.

From the Financial Times account:

Alexis Tsipras, the Greek prime minister, has warned Angela Merkel that it will be “impossible” for Athens to service debt obligations due in the coming weeks if the EU fails to distribute any short-term financial assistance to the country…

In the letter, Mr Tsipras warns that his government will be forced to choose between paying off loans, owed primarily to the International Monetary Fund, or continue social spending. He blames European Central Bank limits on Greece’s ability to issue short-term debt as well as eurozone bailout authorities’ refusal to disburse any aid before Athens adopts a new round of economic reforms.

The troika refuses to release any new bailout money until Tsipras' Syriza-led government can provide a list of revenue-generators to replace the pension cuts and privatizations agreed to by the previous government of Antonis Samaras, as Jim Yardley explains in "In Greece, Syriza Struggles to Deliver Promises as Money Runs Out":

Greece’s finances have deteriorated as postelection anxiety over uncertainty about the bailout spurred a spike in bank withdrawals. Tax collections also plunged, raising questions about whether the government would be able to pay state workers and meet other obligations.

On Feb. 20, Greek leaders signed a four-month bailout extension with its three main creditors — the International Monetary Fund, the European Central Bank and the European Commission. Yet creditors have refused to release a critical 7.2-billion-euro, or about $7.8 billion, loan payment (money that Syriza had once vowed not to accept but that is now badly needed) until the government provides a list of acceptable structural reforms to replace pension cuts and other austerity measures that had been under consideration by the previous government.

To counterattack, Tsipras voiced support for the idea of German reparations. This from a story, "Syriza’s Call for German Reparations: A Bolivaran Tsipras?," by Joshua Tartakowsky which appeared on CounterPunch over the weekend:

In his speech to the Hellenic Parliament, Prime Minister Tsipras touched on the issue which both some Anglo-Saxon socialists and Conservative Germans would wish would have avoided. Tsipras brought to public view the issue of reparations of World War II, and the fact Germany did not pay back the interest-free forced loan made on the Greek bank by the German occupation forces until today. While some reparations were paid in the 1950s, these were quite small considering the damage and did not include the forced loan. Tsipras demanded reparations from Germany for the immense damage and killing caused during the brutal German occupation as a necessary act to restore historical justice. The parliament decided on the establishment of a committee led by economists and historians who will pursue the issue of reparations. The Greek Justice Minister said that if necessary, he would consider seizing German assets in Greece, including, for example, the Goethe Institutes in Athens and Thessaloniki and even homes of German citizens.

In the Merkel-Tsipras story that appears in today's paper Smale summarizes the sniping between Greece and Germany as follows:

Verbal hostilities between Greece and Germany mounted in recent weeks, with particular bitterness lacing the remarks of each country’s finance ministers. Last week, a controversy swirled over whether the Greek minister, Yanis Varoufakis, had made a provocative one-fingered gesture at Germany at a conference in Croatia two years ago.

More gravely, the question of whether Germany should pay more reparations to Greece for Nazi war crimes and forced loans has flared, with some leading figures on the German left ready to consider such payments.

The magazine Der Spiegel summed it all up with a cover this week superimposing a picture of Ms. Merkel on an old photograph of Nazi commanders at the Parthenon in Athens under the headline, “The German Übermacht.” In an accompanying article, it argued that fellow Europeans increasingly see Germany, which is Europe’s biggest economy, and its leaders as dominant. “Yet they are rather a weak than a strong hegemon,” Der Spiegel said of the Germans.

In bad news for Greece, Smale reports that Mario Draghi, head of the European Central Bank, refuses to allow Greek banks to issue new loans based on short-term Greek government debt: "In a blow to hard-pressed Greek banks, Mario Draghi, the president of the European Central Bank, said on Monday that Greece had not yet met conditions that would allow its debt to again be used to secure central bank loans."

Patience with Syriza-troika impasse, both from the right and the left, appears to be near its end. An unsigned Gray Lady editorial over the weekend, "The Greece Issue Breeds Brinkmanship in the Eurozone," marked this growing testiness among the few tepid Syriza advocates in the mainstream:

There is no doubt that Mr. Tsipras needs to move quickly to reform the Greek economy, which is running low on cash. Tax collections have fallen since his left-wing party, Syriza, took power in January; Greek businesses are complaining that they are not being paid for work they’ve done for the government; and some bigger companies have started moving cash to London. But pushing Greece into default by withholding the short-term financing it needs to pay its bills would be courting disaster.

The rumor is that Tsipras is in Berlin to secure better terms for the privatization of state assets, a red line he promised not to cross.

The fact is that the right is in ascent. The U.S. 2014 midterms, the recent elections in Israel and France, a decent but nonetheless modest showing for Podemos in Spain's Andalusia, all point to an estranged public tacking to the right. Syriza is carrying the weight of not only Greece but the entire global electoral left. A misstep by Tsipras will continue the complete hollowing out of social democracy.

Such high stakes mean that there is little chance of Germany or the troika loosening its chokehold. Syriza will be crushed at all costs in order to leave the field free for the neoliberals to continue a decades-long orgy of looting and pillaging.

Given that, Tsipras must soon realize there is no alternative to a Grexit.