Political war about to break out in Athens
Greek Finance Minister Evangelos Venizelos is leading a Parliamentary revolt against George Papandreou’s surprise decision to put membership of the euro to the Greek people, following yesterday’s meeting with EU bigwigs in Cannes. Papandreou will hold a meeting of his Cabinet at midday in Athens, according to a statement from the premier’s office.
In classic Orwellian style, the G20’s meeting in Cannes has a tagline. It is, ‘New world, new ideas’. It couldn’t be anything else really, could it? Somehow, while ‘New World, No Ideas’ would’ve been far more accurate, it wouldn’t inspire confidence. ‘Car-crash World, Help!’ would be more accurate still…but the same general rule applies.
35 years ago, the US trade magazine Advertising Age ran a very funny piece called ‘The tagline grab-bag’. Back then, any strapline at all that smacked of corporate hubris and client braindeath was fair game – perhaps because in those days, they were relatively rare. One especially stupid one was for an airline that promised, ‘Delta Airlines. We’ll get you there’. I read it and thought, ‘You sure as hell better Delta, or else we’re all dead’.
But things have moved on from simple strapline emptiness. These days only 1984-style mendacity will do. Hence, ‘New World, New Ideas’. It truly is the very quintessence of bollocks, and that’s what The Slog is here to point at and ridicule.
A great deal of mendacity involves hypocrisy (and vice-versa) so the last 18 hours have been a joy to watch. For as first France and Germany fell out, now it seems that the EU has fallen out with Greece, while Papandreou has fallen out with his finance minister Venizelos. A multi-layered anarchy now lies ahead, with the markets confused, tired and cynical. For once, it’s hard to blame them.
But back to hypocrisy. Just as with rats in London, you’re never more than ten feet from a hypocrite at EU or G20 meetings. Nicolas Sarkozy – a man whose country has ignored all EU directives it doesn’t like, and never once been in budget since the euro started – tore into Papandreou (I’m told) with the words, “If you don’t obey the rules, then you must leave the eurozone…accept the plan, or you will not get a single cent more”. (Apparently, Sarko used the word ‘centime’, a deliciously unconscious irony, in that even in what to call the currency’s shrapnel eleven years ago, the French insisted on a special dispensation to keep the French suffix ‘ime’.)
But this is not only double-standards, it’s also bluster: if Greece defaults, France will not be far behind. That assertion is far from being melodrama for effect: a disorderly Greek default would crush at least three major French banks, and be followed swiftly by an Italian collapse. France’s exposure to Greek debt incontinence is higher than that to Italy, but the two together would make an enormous hole in the Elysee’s gold reserves. It would also blow apart the EFSF, turbo-charged or not. It would, in short, be the EU’s end-game.
George Papandreou is thus holding most of the good cards here. I hope this explains why Angela Merkel trod all over Greek sovereignty during the tense five-person session; otherwise, it represents nothing more than an object lesson in what we’re all in for if the Germans don’t get their way at any point in the future.
“You will hold the referendum in December,” she began, “and it will be about eurozone membership only, not the bailout package”. Papandreou agreed to the first part, and said he’d think about the second.
Venizelos sat throughout the meeting looking like a cornered boar. But once back on Greek soil, he made this quite extraordinary statement to the media there:
““Greece’s membership of the euro area is a historic victory for the country that cannot be put in doubt. This achievement by the Greek people cannot depend on a referendum.”
Or put another way, “Listen you tax-evading, taverna-owning rabble, we’re on this Goddamn gravy train, and I’m not going to have you lot voting us off”. We still don’t know what George made of this, but we can guess. A Greek expert I contacted last night asserted that Mr Venizelos is not long for the world of Papandreou and his allies. One wonders if he’ll survive this morning’s Cabinet session in Athens.
Venizelos (a man himself with a record of financial incompetence) is chiefly miffed because his boss kept him totally out of the loop when it came to the referendum, and the military purge. Both, I understand, had been in the works for some time. But notable is the apparent ease with which the Greek Prime Minister signed up a unanimous Cabinet vote of support yesterday. All Papandreou has said about the referendum since the Last Supper is, “It’s not the moment to give you the exact wording, but the essence is that this is not a question only of a programme, this is a question of whether we want to remain in the eurozone”.
Thus the situation remains anarchic: Merkozy say ‘eurozone membership only’, Papa says ‘eurozone and bailout deal’, while Venizelos says, ‘bailout deal only’. In a word, snafu.
Time once again to clear away the nonsense and assess what will happen (of any import) next. Nicolas Sarkozy will return to Paris after the G20 has finished inflating the conference hall with hot air, and be told bluntly by his senior mandarins and the banks that Athens has them trussed up, over a barrel, in a corner, by the short and curlies, and on toast. And unfortunately for the Elysee, Berlin is none too worried about that. Well…that is, of course they’re worried about its potential to cock up the euro, but delighted that the French too must now join the other poodles, and sit obediently waiting for any and all Bundeskommands.
I still think it’s possible that Merkel (and/or Wolfgang Schauble) put Papandreou up to this, but as time goes on it becomes less and less important, really: whatever survives of Europe is going to be run by Berlin. Even though I have German in-laws, I’m sure they wouldn’t mind me observing that this is not a good idea.
As for the Greek bondholders, Papandreou has given them a copper-bottomed excuse not to turn up at the hairdressers. (I don’t believe they were ever going to, but that’s another matter for history to think about). Meanwhile, I have it on good authority that all of the remaining PIIGs have indeed made discreet enquiries about the chances of a special Happy Hour at the hairdressers at some later date – precisely what Merkel always feared.
And then, of course, there is Italy. Yesterday, the Opposition there tried to force Berlusconi’s resignation, and failed. This morning, a new poll shows that only 1 in 5 of the electorate support the Prime Minister. Things must be really serious for Silvio the Swinger, because he’s put his latest album on hold. The idea of an album called Gordon Brown sings the same old Tune just popped into my head, I’ve no idea why. My take on this one is that Berlusconi has held back the release as a ploy to get his poll ratings up. Either way, the country’s bond yields are signalling that the market thinks Italy is speeding on its way towards Gumtree Gulch. (Spain’s costs also spiked yesterday).
You may have spotted this morning that I’m displaying a tendency to be less than serious. This is the way I tend to deal with boredom. Picture those Steven Spielberg movies where all the bad guys have opened Pandora’s Holy Grail of the Covenant or some such. You know that whatever they just let out is going to consume them in the most appalling manner, melting their flesh as creepy-crawlies eat their eyes. Cut and directed by Spielberg, this sequence takes under three minutes. Now imagine watching the eighteen-month version.
Greece is dead, Italy is dead, and Spain is almost there. The EFSF bazooka remains elusive (China backed out yesterday….you read it here first) and the French banks are doomed. The recapitalisation programme for the eurobanks is only a third of what it should be. We still have no concrete evidence that the creditors will play ball at a 50% debt forgiveness level. And to save Greece, it needs to be closer to 90%. Athens will run out of cash about a week after the new Referendum date – which, I now read, has been set for December 4th.
The late Eric Morecambe would’ve said at this point, “Whaddya think of it so far?”
The Slog 