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Desperate times call for desperate measures and Greece is trying to convince and cajole creditors it has a plan, but no one’s sure what it is, or which one it is.

Varoufakis Says Bailout Referendum Possible – BBC

Finance Minister Yanis Varoufakis has said it is possible that a referendum could be held if the eurozone rejects Greece’s debt renegotiation plans.

The comments came ahead of Monday’s Eurogroup meeting in Brussels, where Greece is to give detailed plans of its debt and growth terms.

Greek Prime Minister Alexis Tsipras reacted by urging Mr Varoufakis to use “fewer words and more action”.

And the finance ministry clarified that eurozone membership was not in doubt.

In an Italian newspaper interview on Sunday Mr Varoufakis was asked what his options were if a deal was not agreed. “If needed, if we encounter implacability, we will resort to the Greek people either through elections or a referendum,” he told Corriere della Sera.

This was interpreted by some as a threat to leave the eurozone if talks broke down, something the Greek government was quick to deny.

Greek officials pointed out that the words “for the euro” had been added to Mr Varoufakis’s remarks in brackets in the article. Greece’s eurozone membership was “a given” and did not form any part of negotiations with the Eurogroup, they added.

Mr Varoufakis later criticised the reports as “wilful attempts to undermine the good course” of attempts to agree a deal with creditors.

Greece Has No Good Plan B

Reuters – Hugo Dixon

Greece has no good Plan Bs. Its only rational course of action is to work with its euro zone creditors to reform its economy.

Alexis Tsipras, the prime minister, is in a bind. He agreed a short-term deal with other euro zone governments two weeks ago. But he has found it difficult to sell this to hardliners in his radical left Syriza party back home, who accuse him of a U-turn.

Some of the subsequent rhetoric from Tsipras’ ministerial colleagues, such as promises to cancel privatisations, has been troubling. So have decisions such as raising the salaries of electricity workers.

Meanwhile, Yanis Varoufakis, the finance minister, has sent a rather thin list of proposed reforms to his euro zone counterparts in advance of a meeting on March 9.

He has also raised the possibility of holding a second election or a referendum if Greece met with intransigence from its creditors, although it is unclear whether such a possible appeal to the voters would be the precursor to further U-turns by the government or an exit from the euro or might have some other purpose. Varoufakis will have much explaining to do …

What, then, about the other supposed Plan B: defaulting while staying in the euro? This would be miserable too …

Such a move would bankrupt the Greek banking system as it is exposed to the state. Since Athens would no longer be able to get funds from its euro zone partners to recapitalise the banks, the only option would be to “bail in” depositors – converting a portion of the money in their accounts into shares in the banks, on the lines of what was done in Cyprus. For the duration of such an operation, capital controls would have to be introduced …

The newly bust government, meanwhile, would have to balance its budget. This would be hard given that the depositor bail-in plus capital controls would deaden economic activity.

The state might, therefore, be tempted to pay salaries, pensions and the like with IOUs. This would be extremely unpopular, as the recipients would view them as worth a fraction of real euros. The IOUs would start to circulate as a parallel currency, trading at a discount to euros and seen as the probable precursor to the reintroduction of drachmas.

Given that none of the supposed Plan Bs is any good, Tsipras’ best bet is to persuade his creditors of his good faith and push ahead with vigorous reforms in the hope that they will cut him some slack.

If that means breaking with his far-left faction and calling a new election or a referendum to validate a U-turn in his promises, so be it. His duty is to the Greek people as a whole.

A Vote For Leaving The Eurozone – Reuters

A leading lawmaker from Chancellor Angela Merkel’s conservative bloc has described a Greek exit from the euro zone as a “great opportunity” for the country to bolster its economy, in the latest sign that German sentiment toward a so-called “Grexit” is shifting.

Peter Ramsauer, a former transport minister under Merkel and chairman of the economic affairs committee in the German parliament, wrote in top-selling German daily Bild on Monday that more muddling through with Greece made little sense.

Although no longer a member of the government, Ramsauer is arguably the most prominent politician in Merkel’s camp to come out in favor of Greece leaving the euro zone.

“By leaving the euro zone, as Finance Minister (Wolfgang) Schaeuble has suggested, the country could make itself competitive again from a currency perspective with a new drachma,” Ramsauer, a member of the Bavarian Christian Social Union (CSU), wrote in Bild.

“This would provide Greece with a great opportunity to renew itself economically and administratively, making itself fit again to return to the euro zone from a position of strength.”

Source: The National Herald
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