Yesterday, Greece defaulted on 1.6billion euros in debt payments owed to the International Monetary Fund (IMF) and has been stubbornly refusing the demands of European Central Bankers and European Union ministers to structurally reform its economy.
It’s being reported that Tsipras sent a letter to EU ministers giving in to all their demands with just a few “minor” amendments.
Prime Minister Alexis Tsipras wrote to European leaders and the International Monetary Fund late Tuesday, accepting most of the conditions they had attached to releasing more cash, a European official told CNNMoney.
Tsipras faces considerable difficulty in his own country as the games of kick-the-can down the road, truth or dare, poker and “Let’s Make a Deal” but without numbers on the doors all fail to convince European and IMF leaders that Greece is serious.
Every move Tsipras has made has been to delay and reduce any re-payments to the IMF and ECB. Not because he doesn’t want to pay them back, but because Greece has no functioning economy and, without structural reforms, will never be able to pay the loans back.
The changes Greece requested are hundreds of millions of Euros apart from the requirements the creditors placed upon them. German Financial Minister Wolfgang Schäuble expressed disdain saying that Greece’s changes “aren’t basis for serious measures”.
This week, Tsipras announced a referendum to allow each and every Greek citizen to vote on whether to accept the bailout conditions from the EU/IMF.
A “no” vote basically ends all discussions with the EU, ECB and IMF and Greece is on its own. Grexit, or the exit of Greece from the EU, is a foregone conclusion.
A “yes” vote means Tsipras gives in to 100% of the conditions of the bailout, implements the required austerity measures and gets billions to fund his broken financial system. It also signals a lack of confidence in his strategy, tactics and ability to lead the government.
A referendum is the purest form of democracy – the people directly voting on policy. But, pure democracy has a problem: mob rule. Mob-rule means that emotions and hysteria take the place of sound leadership. It is the reason that America was founded as a representative Republic, not a democracy. Tsipras may be about to discover that failing at his own hand.
Polls are increasingly turning against the anti-austerity government. As Greeks get a taste of Tsipras brand of economic justice, they are finding out that it doesn’t sound anything like he promised. Empty ATMs, pensioners not getting paid, goods becoming unavailable, vendors only accepting cash and soon – economic collapse.
Greek’s prime minister is simply trying to instill enough faith in his government to survive the referendum he demanded. He needs a “no” to claim victory – although for only a short time.
In a comment to parliament this morning, Tsipras tried to convince the nation that he’s not capitulating. “It is true that we are seeking an honest compromise with our lenders but don’t expect an unconditional agreement from us.”
European leaders have already notified Greece’s prime minister that if he wants to restart the conversation, he needs to cancel this Sunday’s referendum. Otherwise, they’ll have to wait for the result to see where the purely democratic vote takes the small nation.