Yesterday’s ‘2.5 billion’ Athens shortfall turns out to be recycled bollocks


Whether the world eventually sees them as reasons or excuses, Western media and top eurocrats were last night blaming a variety of factors for the cancellation of today’s FinMinCom in Brussels…..and thus the non-approval of the Greek austerity measures. The Slog has however (with the help of German sources and Sloggers) established that so-called budget ‘black holes’ thrown up last night are a largely German fiction, the leaks about bondholder troubles came from the German Bundesbank….and astonishingly, diplomat sources in France and Greece think Italy’s Mario Monti wants the Greek bailout cash to go towards economic investment.

The EU is rapidly turning into Every Man For Himself.

German Newspaper Deutsche Mittlelstands Nachrichten (DMN) broke a story last night shortly after 7pm GMT which appeared at first sight to lie at the heart of both Berlin government opinions about Greek untrustworthiness, and the cancellation of yesterday’s FinMinCom meeting in Brussels.

‘New EU Demand: Greece must save 2.6 billion euros in the short term’ said the headline. What followed was rather a long stream of specific Troika demands…occasionally laced with reprimands: ‘Too often we find out that Greece has not put into effect the appropriate austerity measures and reforms. A contract document has been seen by news agency The Associated Press [saying] the Greek government must make and implement savings of around 2.6 billion euros….’

Except that this was spin – and once again looked like a piece of Chancellery media placement. One looks down the list of diktats (and they are exactly that) and the remaining sum graciously left by the Troika for Athens to find all by itself and not just in one shop is…325m euros. It’s the same 325m euros Renn and Schauble have been blathering on about since last Saturday. The same one thousandth of the outstanding debt.

Some of the required cuts are mad (a billion euros off the Health Budget) and some hysterically hypocritical (300m off Defence – an amount  Berlin and Paris could wipe out tomorrow by allowing Greece to cancel Franco-German arms supplies in the pipeline). But basically, this is an influential German newspaper re-running an old story to suggest “Hey guys – the greasy Greeks screwed up again”. The politicians in Athens have in fact already signed off on all these savings: frankly, they could find the 325m euros somewhere in the folds of Venizelos’s skin. This is just an invention – perhaps allowing Berlin more time to organise an Alles in Ordnung default.

But in another sensational development, sources in Paris and Athens last night saw the hand of Italy’s Mario Monti in the machinations.”Monti thinks the money is wasted on Greece,” said an Athens informant yesterday evening, “and should be spent on EU economic growth instead. We think he wants the money for Italy’s future.”

“The decision [to postpone FinMinCom] was the result of an evaluation by the head of the eurogroup, Jean-Claude Juncker, that there weren’t sufficient elements of consensus to be sure that a meeting would be successful,” Italian Prime Minister Mario Monti told the Sky TV channel in Italy last night. But that is classic euro release-speak: accurately uninformative. Signor Monti has been consistently voluble for some weeks now on the subject of a changed EU focus from austerity (which in Greece has obviously made things worse) to economic growth – which would be good, given the continental economy beyond the Rhine is in neutral. I put this line about Monti writing Greece off to a Parisian diplomat last night, and was stunned by the response.

“We have heard the same,” he confirmed. “It may just be rumour. We have nothing concrete as far as I know just yet. But yes, Mario Monti is a quietly determined character. He is impressive, make no mistake. It does fit.”

The FT this morning points out that ‘Hardline officials in Germany, the Netherlands and Finland are increasingly urging a Greek default’, and they’re not wrong: but the overall tone of the Pink’un’s piece is that it is the ezone nations themselves who can’t agree what to do next. This also reflects what I’ve been hearing: going back to The Slog’s first post of yesterday, I have since then definitely established that the leak given to Handelsblatt (about Greece being unable to satisfy the bondholders) came from the German Bundesbank not the ezone’s central bank run by Mario Draghi, the ECB. It is highly probable, I understand, that the leak was forthcoming from an area not unadjacent to the office of Bundesbank President Jens Weidmann, a well-known anti-bailout hawk.

Herr Weidmann moved a little closer to the limelight – spookily, within minutes of the DMN story breaking – by officially ruling out Bundesbank participation in the bailout, adding “There has to be an administration that implements the measures, and a population that accepts them.” He is a firm exponent of the ‘take the money and run’ theory about Athens – and I am bound to observe, he is very probably right.

What’s gradually emerging is a picture of Germany placing media editorial poison, stirring up the bondholders, and finding new budget sums to query, in the hope of pushing Greece towards default, while still having some control over it by slowing everything down. But there is a degree of disarray among the 17 eurozone Ministers involved that may yet destroy the plan….and very few observers with whom I’ve spoken think anyone can ‘control’ a default in somebody else’s country.

Some of the Brussels/Berlin editorial poison was dutifully hoovered up by Reuters which, under the headline ‘Greek political leaders blow chance to seal eurozone deal’ began by asserting ‘party leaders in Athens failed to provide the required commitment to reform’. Technically that isn’t true: they’d signed off on the need to find another one thousandth of a cut. And Antonis Samaras – the opposition New Democracy leader – let it be widely known yesterday afternoon that he will sign the additional papers relating to this huge sum of money….now suspected of perhaps being under Venizelos’s left armpit.

Inflammatory statements by Samaras – also picked up by The Slog yesterday – had been used earlier by Berlin to raise doubts about whether Greece would  renege on the deal following elections. Elections, as we all know, are – literally – seen by the EU Gestapo as “potential accidents”, and thus to be avoided whenever possible. But this morning yet more revised papers will be signed in Athens about the 325m euro black pinhole – by Samaras as well – and then after that Berlin will have run out of excuses. But that’s OK because the meeting has been postponed until next Monday.

Just using my abacus finger-computer here, I calculate that Monday is six days away…and the 325m has been talked about since last Saturday. This is an awfully long time to spend looking in EvangeloVenizelos’s underwear.

Meanwhile, Mario Monti is quietly ingratiating himself with the bosses. He’s a smart Goldman-trained corporate who, like his namesake and compatriot Mario Draghi, can play office politics with the Big Boys. He told Sky later in last night’s interview:

One day, I don’t see why Italy would be considered less stable than Germany. In many areas we are demonstrating that we have adopted the culture of stability, for example with our pension reform, which many countries admire. If Italians continue to act with the maturity that they are showing now, I wouldn’t put any any limit on the spread going to zero.”

Great piece of up-talking there, Mario. And if you believe that, you’ll believe any old bollocks anyone comes out with.