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While embattled Prime Minister Alexis Tsipras is counting on European leaders to dole out a delayed installment from international loans – with cash running out fast in Greece – the prospect of capital controls similar to those imposed in Cyprus have been raised again.

Tsipras on March 19 is due to meet with a number of European Union heavyweights in Brussels ahead of talks aimed at trying to find a solution to Greece’s continually crumbling economy and as his government has done virtually nothing in the month since getting a four-month bailout extension, contingent on passing reforms he had vowed to reject.

Tsipras is hoping for a political solution to the country’s financial problem and is set to meet with has asked to meet with European Central Bank President Mario Draghi, German Chancellor Angela Merkel, French President Francois Hollande and European Commission President Jean-Claude Juncker at the summit, government spokesman Gabriel Sakellaridis said.

Greece’s creditors, the troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) is holding back a 7.2-billion euro installment the country desperately needs – and which Tsipras at one point said he wouldn’t accept – until more tough conditions he vowed to reject are passed.

Forced to backtrack on campaign promises not to deal with the troika, seek debt relief and restore social benefits, Tsipras, the Radical Left SYRIZA leader, is cornered by math, with his coalition partner, the Independent Greeks (ANEL) also dropping its resistance to austerity as the country closes in on going broke without more aid.

“After one-and-a-half months of contact, we believe that for there to be a political solution, it is important for the euro-area’s big countries to weigh in,” Sakellaridis said, the news agency Bloomberg reported.

“We’re not downplaying technical discussions, but we want there to be a framework, and for that we’re asking for a political solution,” he said. That comes as some analysts have said the government can’t pass the troika reforms without so much political pain it could fall.

Eurozone finance ministers want a credible plan to implement reforms and meet fiscal targets but all Finance Minister Yanis Varoufakis, a Marxist economist, has come up with so far are two vague outlines with no assessment of their impact, iring his colleagues and leading to reports critics want him fired.

Greece must come up with two billion euros on March 20 to pay lenders and Tsipras is raiding the country’s pension funds and bank recapitalization monies to do it while insisting salaries and pension are safe – for this month – although talk has arisen they could be slashed again.

That would force him to break another promise, or that the situation could get so bad the government would issue IOU’s instead of money and maybe even be forced out of the Eurozone and back to the drachma.


Eurozone finance officials discussed the Greek situation in a conference call on March 17 after the group’s Chairman, Jeroen Dijsselbloem, said the country could use capital controls to remain in the currency union.

“It’s been explored what should happen if a country gets into deep trouble — that doesn’t immediately have to be an exit scenario,” Dijsselbloem told BNR Nieuwsradio. For Cyprus, “We had to take radical measures, banks were closed for a while and capital flows within and out of the country were tied to all kinds of conditions, but you can think of all kinds of scenarios.”

Cyprus agreed in March 2013 to confiscate 47.5 percent of bank accounts over 100,000 euros, limit bank withdrawals to 300 euros a day and set limits on international transfers and other capital controls to prevent a run on the banks. Those have been lifted gradually.

While technical discussions have begun with Greece over how to implement a Feb. 20 euro-area finance ministers’ agreement for a four-month extension to Greece’s loan, progress so far has been minimal, according to the people involved in the talks, Bloomberg said.

Officials from the institutions monitoring Greece’s bailout said the government is on a willy-nilly course of unilaterally pushing measures through Parliament that have an unclear fiscal impact and without consulting them, a person familiar with the matter said.

Greece’s Parliament will vote on March 19 on measures to deal with the country’s social crisis, including subsidizing electricity, food and housing for households in poverty.

The government also submitted legislation for repayment of tax arrears in 100 installments to be voted on March 20 which it hopes will provide a boost to the state coffers although the impact would take years to be felt.

Source: The National Herald
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