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Tuesday, July 14, 2015

We Have No One to Blame But Donald Tusk

     Turns out we were so close to getting out of Sunday's marathon talks without the poison pill of a deal that Tsipras is now going to try to get passed in Parliament. It was 6 am in English time and Merkel and Tsipras were both heading to the exits and then Donald Tusk happened:

   “Sorry, but there is no way you are leaving this room,” the former Polish prime minister said.

    "The sticking point was the size and purpose of a privatisation fund to be backed by sequestered Greek assets. Ms Merkel wanted the €50bn of sales to be devoted to debt repayments; Mr Tsipras saw that as a national humiliation that would cede control of assets worth almost a third of Greek national income. His alternative was a smaller fund, whose proceeds would be reinvested in Greece."

    "A compromise was ultimately found after more than an hour discussing nearly a dozen different structures. It was to be the coda to a weekend that featured one of the most exhausting and fraught negotiations in a seemingly interminable crisis that has provided the EU’s sternest test."

     http://www.ft.com/cms/s/0/f908e534-2942-11e5-8db8-c033edba8a6e.html#ixzz3fqxPXh4Z

     Yes, a great compromise-the fund is $50 billion euros which just happens to be Merkel's number. 

     Tusk did have that one great line 'We have an aGreekment' but nevertheless we would have been better off without an aGreekment and the room had figured that out prior to Tusk's intervention:

     "After almost nine hours of fruitless discussions on Saturday, a majority of eurozone finance ministers had reached a stark conclusion: Grexit — the exit of Greece from the eurozone — may be the least worst option left."

     "Michel Sapin, the French finance minister, suggested they just “get it all out and tell one another the truth” to blow off steam. Many in the room seized the opportunity with relish."

     "Alexander Stubb, the Finnish finance minister, lashed out at the Greeks for being unable to reform for half a century, according to two participants. As recriminations flew, Euclid Tsakalotos, the Greek finance minister, was oddly subdued."

    "The wrangling culminated when Wolfgang Schäuble, the German finance minister who has advocated a temporary Grexit, told off Mario Draghi, European Central Bank chairman. At one point, Mr Schäuble, feeling he was being patronised, fumed at the ECB head that he was “not an idiot”. The comment was one too many for eurogroup chairman Jeroen Dijsselbloem, who adjourned the meeting until the following morning."

  “It was extremely hard, violent even,” said one participant.

  "As the hours passed and Sunday turned to Monday, the prospect of a Grexit seemed to grow more probable, participants said, heightening divisions between sleep-deprived politicians and diplomats that have developed over six months of mostly frustrating negotiations."

   Ah, what might have been. Still time will show that they were right before Tusk came to the rescue. It is the least bad option.
    The only real question left is when it will happen. For the Greeks, the sooner the better. It would have been better in 2011 or in January or last month or last week, but it's better today than tomorrow and tomorrow is better than next month or next year.

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