There was no settlement between the EU and Greece before Greek Easter as promised. I wonder how many more times that headline will appear.
The latest fight was over €3.6 billion in additional austerity measures to be undertaken by Greece, which the Greek government claims is unconstitutional.
It "appears" the US is now weighing in on the Greek financial situation via the IMF. The IMF has thrown a wrench into the agreement between Greece and the EU by demanding additional austerity measures. It is no secret that the US was supportive of Syriza coming to power, but it appears that it is now weary of Greece's unwillingness to settle its debt talks.
I am sure talks will resume after Easter, but the Europeans simply do not "get it." There is simply no retribution to Greece for doing nothing.
I was speaking to a lawyer friend in Athens this week and we were debating whether or not Tsipras is a fool or a genius. I think we settled on "political genius." Tsipras' actions are designed to protect the people, and when I say people, I mean pensioners and those working in the public sector. Tsipras has said those people will not have a cut in pensions, higher taxes or lose their homes. Unfortunately, that means everyone else must make larger social security payments, pay higher taxes and have any asset they own at risk from an economy that continues to spiral down.
The quandary is that no one has yet been able to articulate a vision to rescue all of Greece from the crisis and until that happens, nothing is likely to change.
At the risk of going from fact to opinion, Greece needs to do the following:
1. Phase out pensions for those under the age of 65 over the next five years. Anyone who is over the age of 65 will have no cut in their pensions. 2. Reduce the individual and business tax rate to 20% immediately. Greece's tax structure is "leaky" at best. I would argue that Greece could end up with higher tax receipts by enforcing lowering taxes. 3. It is time to go after Greeks who have parked billions in Swiss (and other tax havens) banks. 4. Sell €10 billion of NPLs each year until the NPLs represent less than 5% of total loans.
The list of other items is irrelevant. If Greece follows this plan for five years, the EU will agree to reduce Greece's sovereign debt to 1 times its GDP.
The only other option is the drachma, which is far easier to implement and will let Greece pay its obligations with a currency that will be devalued, resulting in a cut to pensions and a cut in sovereign debt.
The decision is in Europe's hands.
I keep trying to come up with a way to explain the plight of the Greeks and make it relevant. Today, I rode in a cab that was driven by a doctor; he lost his job at a hospital in Athens. In his spare time, he gives medical aid to refugees at the Port of Piraeus. That is all you need to know about the Greeks. Life here is not what you think.
As for the region, the world is mesmerized by the focus on ISIS, Syria and Iraq. There are two more intriguing specters.
The first risk is the Suez Canal. Do not be surprised if the Red Sea becomes ISIS's new battle ground. The radicals control the coast of Yemen, the Sinai Peninsula is up for grabs and who knows the stability, or lack thereof, in Sudan, Eritrea, Djibouti and Somalia. Disrupting trade through the Suez Canal would have a detrimental effect on the European economy and would kill the hopes of turning the Port of Piraeus into a new European logistics hub.
The second risk is energy. While the US killed Russia's plans for the South Stream through the Black Sea to Europe, it only makes the energy assets in Greece and the Balkans more of a target for the Russians. The only gas pipelines that are not controlled by Putin go through Turkey into Greece and Bulgaria. Most of the gas that will flow from Iran and Azerbaijan must flow through Greece and the DESFA and TAP pipelines. No one thinks of Greece as an important player in the energy game, but they will soon understand. Where the US or the Europeans are on this issue is anyone's guess, but so far they seem to be asleep at the switch.
Greece continues to be an interesting place; we have a front row seat.