Greece seems to be more divided than ever about who owns the Trojan horse and where to park it next to entice the next recipient of the perpetual economic problem.
Mr. Samaras, Greek opposition leader, held a secret meeting with Prime Minister Putin last week to negotiate a potential deal while Mr. Papademos was still convincing the IIF to agree on a “haircut” and an exchange of debt.
Now the debate in Greek Parliament also centers around the full implementation of the required austerity packages to guarantee the next Troika tranche of the bailout package, due March 20th.
No matter what the outcome of the debate may be, the fact remains that what seemed like a simple liquidity problem in 2010 has turned into a full scale solvency problem for Greece that does not leave any room for political errors.
Greece’s economy already contracted by 6% in 2011 and is under further strain this year due to low productivity, low manufacturing and low exports.
Mr. Samaras’ pact with Russia may bring some relief if and when Greece is allowed to export more agricultural products to Russia but that may not be enough to put a faltering economy back on the tracks.
The price to pay for such a small Russian token may prove to be very expensive long-term.
Building Greek infrastructure with Russian funds may be attractive from a job creation perspective but it also means Russia, and Gazprom in particular, will control the natural gas pipeline to the Mediterranean.
Two very different forces are at work in the Greek Parliament. One that tries to meet the ECB/IMF requirements but does not want to lose control about how to spend the money, and the other who is trying to find a White Knight while selling the entire store.
Neither one is a solid solution or foundation upon which to build a bright future.
Should Samaras get his way then Greece will stare at new elections in April and without a new financial deal with the IIF and/or ECB/IMF.
That can only mean one thing: Greece leaves the Eurozone and returns to its own legacy currency in which case a selected default is imminent and unavoidable.
Should this scenario materialize then there is no reason for the IIF to continue to negotiate the depth of a haircut. They will have to take one no matter what.
That may be a good option and will open the door for Germany to lead the Eurozone with France carrying the coat tails while Italy and Spain are happy to be saved by the bell.
Written by Nick Doms © 2012, all rights reserved.
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