After visits to Paris, London and Rome, today the new Greek Minister of Finance, Yanis Varoufakis, met the president of the ECB in Frankfurt, Mario Draghi, and at the end of the meeting he said he had a "very constructive discussion", from which he obtained "strong encouragement for the future", because "the ECB is also the central bank of Greece and will do everything possible to help the member states of the euro area”.
On the same line too Alexis Tsipras: "I am very optimistic after these discussions, we don't have an agreement yet but we are going in the right direction to reach it", said the Greek premier today in Brussels, where he met the president of the European commission Jean-Claude Juncker.
The plan of the new government in Athens envisages, among other things, that the ECB grants to Greece the possibility of returning to issuing short-term bonds for a total of approximately 10 billion. In this way, the country would have sufficient liquidity not to extend the international financing of the Troika and arrive unscathed until the end of spring, the period by which Tsipras's executive expects to have reached a new agreement with international creditors.
But what would the new agreement contain? First of all, Greece does not ask for a new debt cut: “We divide it into three parts – explained Varoufakis in an interview published today in La Repubblica -. The one to the ECB will be paid in full and within the terms, but the first deadline is July 20th. For the other tranches, the IMF and the countries, we propose replacement with new bonds at market interest, today very low, with a clause: we will start paying back in full once solid growth has started in Greece. We can do this without breaking a balanced budget and at the same time financing development initiatives, as long as we are free from the burden of interest. We have also started negotiations with the IMF”.
As for thelast tranche of Troika funding, which should arrive at the end of February, "out of the 7,2 billion expected - continued the Greek minister - we will take only 1,9 (to obtain the other resources, Athens would be forced to introduce further austerity measures, ed), because they are our money, the profits that the ECB collected from certain bonds purchased in the 2010 rescue”.
Precisely this initial step would become impossible if the ECB were to take a hard line. The Financial Times writes today that the Central Bank does not intend to take charge of any short-term Greek government bonds issued by Athens. According to the British newspaper, Greece would like to "raise the ECB's ceiling for purchases of short-term securities by 15 billion to 25 billion".
If conceived in these terms, the project should overcome some important difficulties, since in any case the European treaties and the statute of the ECB prohibit the direct financing of public debts by the Eurotower, which cannot buy bonds at issue auctions , but only on the secondary market. Even when buying bonds that are already outstanding, however, the ECB is forced to focus on products with creditworthiness requirements that would not be met by Greek government bonds. Therefore, it could not be the Central Bank that buys the bonds. But, regardless of who the buyers are, according to the FT, the ECB would be oriented towards denying Athens the very possibility of issuing short-term bonds.
Varoufakis further asks that the ECB directly supports Greek banks, but loans to institutions are released by the Eurotower only after a check on the solidity conditions of who should receive the loan. And, we can bet, on this point the clash between Draghi and the hawks of the Frankfurt Governing Council will reignite.
