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Christina Vasilaki: The British referendum “unlocks” the installment of 7.5 billion.

Looking ahead to the British referendum, on the 23rd of June, regarding the Brexit, the procedures concerning the approval of the second installment of the third Greek programme of 7.5 billion are being completed. On today’s urgent teleconference of the technocrats of the Ministries of Finance (EuroWorking Group), is expected that the final compliance report of the institutions regarding the application of all the prerequisites from Athens, will be examined in order to reach the successful completion of the first review.

Given that the review of the EWG is positive, it is expected that at the Eurogroup on the 16th of June (on the same day, earlier, there will be a meeting of the Board of Directors of the European Stability Mechanism, that is composed as well from the Ministers of Finance of the Eurozone), the procedures regarding the approval of the report from the institutions and of the updated Memorandum of Understanding (MOU) from the national parliaments and from the Ministers of Finance will begin. The target of the Eurozone is nothing else other than accomplishing the disbursement of the installment of the 7.5 billion just before the referendum of the 23rd of June, as there is a common understanding that a notion of “stability” in the Greek matter can have a positive effect on the voting. Besides, what is really important during this period for the European Union is  not to be called to face a new crisis the following months, this time named as Brexit.

Hence, observers from Brussels are commenting that at the Eurogroup of the 24th of May in Brussels, a “political decision” was decided regarding the completion of the review, even though Athens had not implemented “correctly” all the prerequisites. The abeyances that were concerning the exemptions on the law for the non-performing loans(“red loans”), as well as some provisions of the pension reform (mostly in the retroactive reimbursement of the Social Solidarity Benefit for Pensioners), were settled during the intermediate days; however, leaving again some unfinished details, mainly in what concerns the Privatization Fund.

Brussels are pressuring Athens, in order to move forward with the legislations that will ensure some kind of immunity to the European experts that will be employed in the new Fund. The motive for this request was the prosecution of six technocrats of the Hellenic Republic Asset Development Fund (HRADF)- three of them were foreigners, appointed from the EuroWorking Group – with the accusation of disloyalty and the aggravating conditions of the law for misuse/abuse of the Government that concerns the “non-beneficial use”  of 28 realties. Τhe defendants were finally set free, however, sources from the institutions say that is necessary for the issue to be solved completely and legally, in order for this kind of persecutions to not happen again in the future, and to secure satisfactory functional margins for the experts that will be employed on the new Privatization and Investment Fund. Even though for Brussels the issue is mostly technical rather than political, in the way that Athens seems to face it, given that it will not be solved from the institutions, it might concern the technocrats of the EuroWorking Group.

In Athens, the attention has almost completely turned to the ECB, whose decision for acceptance of the Greek bonds that Greek banks have as a guarantee for the supply of cheap liquidity to them (waiver) is expected to be taken within this month. The head of the ECB, Mario Draghi, after the meeting with the Board of Directors on the 2nd of June, stated that when the complete implementation of all the prerequisites for the completion of the valuation is finalized, the waiver restoration will be decided, possibly in the next planned meeting on the 22nd of June. Besides, just before the Eurogroup of May, international investors have pointed out that the investment interest for purchasing Greek debt can only return after the ECB starts again to supply cheap liquidity to the Greek banks, and in a second phase, includes Greece in the programme of quantitative easing.

Solution for the debt, but in 2018.

Even though the 19 of the Eurozone decided at the Eurogroup on the 24th of May the complete financial coverage of Greece (10.3 billion in total until October) in what concerns its borrowing obligations for the next months, but also the payments of the overdue debts of the Government, regarding the lightening of the Greek debt, they were more restrained. Despite the pressures of the IMF, the Eurogroup decided that the measures for the debt will be approved in essence after the end of the programme. “We have reached as far as we could”, was the characteristic phrase for evaluating the agreement from a European diplomatic source; because Germany’s “red line” was nothing else rather than not to vote measures for the lightening of the Greek debt with the present German government, meaning not before the end of 2017 when the next German elections will be conducted.

Regarding the participation of the IMF, which also concerns Germany a lot, Brussels have spoken about a temporary “truce” due to Brexit, expressing their concerns that the struggle between the two for the Greek debt is expected to be reawakened in the forthcoming fall. The countries that needed the participation of the IMF in order for their governments to approve the next disbursement, succeeded to take the least possible guarantee from the Fund, which essentially was not to be removed. However, they did not gain anything more than a promise from the Fund that it will advocate to the Executive Director a new programme with Greece, given that in October he judges that – in the basis of the new data – the measures that the Europeans were obliged to, will be enough in order for the debt to be viable.