Posts Tagged ‘International Monetary Fund’

Greece’s mass psychology of revolt: Greek Finance Minister Yanis Varoufakis calls Athens’ creditors of “terrorists” — Says they want to instill fear, humiliate the Greeks

July 4, 2015

BBC News

Greek Finance Minister Yanis Varoufakis has accused Athens’ creditors of “terrorism”, the day before a referendum on an international bailout.

Speaking to Spain’s El Mundo newspaper, he said the country’s lenders wanted to “instil fear in people”.

Earlier the two sides in the referendum ended their campaigns with big rallies.

The government has urged voters to say “No” to the terms of a bailout package. But opponents warn this would see Greece ejected from the eurozone.

Greece’s current bailout programme with the European Commission, International Monetary Fund (IMF) and European Central Bank (ECB) ran out on Tuesday.

Banks have been shut all week, with limits imposed on cash withdrawals.

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Yanis Varoufakis said Greek banks would reopen on Tuesday whatever the outcome of the vote

Mr Varoufakis said the so-called “troika” of creditors wanted a “yes” vote to win so they could humiliate the Greeks.

“Why did they force us to close the banks? To instil fear in people. And spreading fear is called terrorism,” he said.

He added that PM Alexis Tsipras would still reach an agreement with creditors if the result was “No”, and that banks in Greece would reopen on Tuesday whatever the outcome.

Correspondents say it is unclear whether this will happen.

Nasty rhetoric

The BBC’s Chris Morris in Athens says that, for many, this has become a choice about whether to stay in the eurozone.

With so much at stake, he says, the rhetoric is getting nasty.

Tens of thousands of Greeks attended rival rallies on Friday night.

Mr Tsipras told supporters Greece needed “say a proud ‘No’ to [European] ultimatums” to sign up to fresh austerity.

But “Yes” campaigners said they believed Mr Tsipras could not deliver on such a promise.

Nikos, a doctor, told AFP: “They cannot pretend any longer that it’s not about leaving the euro… and outside the euro lies only misery.”

Ballot paper question

“Must the agreement plan submitted by the European Commission, the European Central Bank and the International Monetary Fund to the Eurogroup of 25 June, 2015, and comprised of two parts which make up their joint proposal, be accepted? The first document is titled “reforms for the completion of the current programme and beyond” and the second “Preliminary debt sustainability analysis”.

Voters must check one of two boxes – “not approved/no” or, below it, “approved/yes”

Voices from a Greek island

The question that makes (almost) no sense

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Opinion polls on Friday suggested the country was evenly split. An Ipsos survey put “Yes” supporters at 44% and “No” at 43%.

Opinion polls within 24 hours of the voting are banned, as are more campaign rallies.

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“No” supporters made their feelings felt in Athens on Friday

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The “Yes” rally took place close by

The European Commission, the European Union’s executive arm – one of the “troika” of creditors along with the International Monetary Fund and the ECB – wants Athens to raise taxes and slash welfare spending to meet its debt obligations.

On Tuesday, the previous eurozone bailout expired, depriving Greece of access to billions of euros in funds, and Athens missed a €1.5bn repayment to the IMF.

http://www.bbc.com/news/world-europe-33393759

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Greece’s mass psychology of revolt

By Paul Mason
The Guardian

When Times correspondent George Steer entered the city of Guernica in April 1937, what struck him were the incongruities. He noted precisely the bombing tactics “which may be of interest to students of the new military science”. But his report begins with a long paragraph describing the city’s ceremonial oak tree and its role in the Spanish feudal system.

Sitting in Athens this week, I began to understand how Steer felt. Sunday’s referendum will take place under a kind of financial warfare not seen in the history of modern states. The Greek government was forced to close its banks after the European Central Bank, whose job is technically to keep them open, refused to do so. The never-taxed and never-registered broadcasters of Greece did the rest, spreading panic, and intensifying it where it had already taken hold.

When the prime minister made an urgent statement live on the state broadcaster, some rival, private news channels refused to cut to the live feed. Greek credit cards ceased to work abroad. Some airlines cancelled all ticketing arrangements with the country. Some employers laid off their staff. One told them they would be paid only if they turned up at an anti-government demonstration. Martin Schulz, the socialist president of the European parliament, called for the far-left government to be replaced by technocrats. And the Council of Europe declared the referendum undemocratic.

With ATM cash limited to €60 a day, one shopkeeper described the effect on her customers: on day one, panic buying; day two, less buying; day three, terror; day four, frozen. The words you find yourself using in reports, after looking into the eyes of pensioners and young mothers, make the parallel with conflict entirely justified: terror, fear, flight, panic, uncertainty, sleeplessness, anxiety, disorientation.

If the effect was to terrorise the population, it has only half worked. The pollsters are simply finding what Greek political scientists already know: society is divided, deeply and psychologically, between left and right.

The anthropologist David Graeber points out, in his history of debt and debt forgiveness Debt: The First 5,000 Years, that the transaction carries the implicit threat of violence. Debt gives you the power of rightful coercion with all the blame attaching to the victim. But rarely has that power been used as Europe used it against Greece last week. In the 2013 Cypriot crisis, where the EU enforced the seizure of money in people’s bank accounts, the government caved in at the first confrontation.

Greece is different. If I were to pick out the equivalent of Guernica’s symbolic oak tree here, it would be the graffiti. “We didn’t die for love so why would we die of starvation?” reads one plaintive message. Throughout the five years of the crisis, Greeks have been using the walls for mutual public psychotherapy. “I’m being tortured,” reads a popular tag by a famous graffiti sprayer. “I’m spinning,” reads a parody tag that rhymes with it, often found close by, reportedly sprayed by the first guy’s jilted girlfriend.

I’ve often wondered what it would take for the walls to go white again. But there is no obvious answer. The graffiti, like the sporadic rioting and casual ultra-leftism among the young, broke out in 2008 during the two weeks of violence after the killing of 15-year-old Alexis Grigoropoulos by police. That was the modern Greek 1968, and if you measure it against the original, by now, we should be in the mid-70s, a moment of demobilisation and defeat. But whatever the outcome of Sunday’s vote, it is hard to see this mass psychology of revolt and refusal going away. Like the oak tree at Guernica, it can survive financial carpet-bombing.

What worries me now is whether Europe can survive the act of inflicting it. Sitting in their ministries, the Greek negotiators were coolly drawing parallels with the 2005 Dutch and French referendums on Europe, where no votes led to a change in the European offer and a yes thereafter. But they had misunderstood. To drive a country to the point where its banks close and its pharmacies run out of medicine is not done to force a mind change. The aim was, as Telegraph journalist Ambrose Evans Pritchard wrote, regime change.

But here lies the central problem. Most of the time, when states deploy decisive measures against other states they have a plan not just for who will govern but what the replacement system will be.

Germany’s mistake, in this sense, since 2010, has been its failure to demand a modernised and productive capitalism. It imposed European debt rules via parties who were never prepared to impose the European norms of business and social equity. Indeed, the EU has relied on a local business elite that is often physically absent: happier in Knightsbridge than in its Athenian equivalent.

When Angela Merkel and Nicolas Sarkozy overthrew first George Papandreou and then Silvio Berlusconi, they could at least console themselves that it was a political mercy killing. Not many people rioted. And as Sarkozy implied, when he slapped me down at a press conference, this was the European way.

After this week, the narrative of the EU as “imperialist” will blossom in Greece – but true imperialisms imposed order. The outcome here is likely to be very different.

Top Greek Political Leaders Meet With Banking Officials — Referendum Still Set For Sunday and Polls Show the Vote Will Be Close — PM Tsipras tells people to vote “No”

July 3, 2015

The Associated Press

Top banking officials in Greece are meeting with Finance Minister Yanis Varoufakis, Deputy Prime Minister Yannis Dragasakis and Alternate Finance Minister Dimitris Mardas.

A finance ministry official says the meeting is being attended by the deputy governor of the Bank of Greece and the managing directors or presidents of the country’s five largest lenders: Piraeus Bank, Alpha Bank, Eurobank, Attica Bank and National Bank of Greece as well as the secretary general of the Greek banking association.

The meeting comes as Greece gears up for its referendum Sunday and on the fifth day of restrictions on banking transactions, with Greeks limited to 60 euro daily withdrawal limits. Many ATMs have run out of 20 euro notes, meaning the limit for many has effectively been reduced to 50 euros.

The official, who spoke only on condition of anonymity in line with government rules, did not reveal what was being discussed.

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Two Sides Neck and Neck Before Greece’s Referendum

ATHENS, Greece — The brief but intense campaign in Greece’s critical bailout referendum ends Friday, with simultaneous rallies in Athens supporting “yes” and “no” answers to a murky question in what an opinion poll suggests could be a very close vote.

Prime Minister Alexis Tsipras called the referendum last weekend, asking Greeks to decide whether to accept creditors’ proposals for more austerity in exchange for more loans — even though those proposals are no longer on the table.

He says a “no” vote would put him in a stronger position to seek a better deal for Greece within the 19-nation eurozone to reduce its 320 billion-euro national debt and make payments more sustainable.

In a televised address to the nation Friday, Tsipras urged Greeks to vote “no to ultimatums, divisions and fear.” He emphasized that Sunday’s referendum is not a vote on whether Greece will remain in the euro, Europe’s joint currency.

But opposition parties, and many European officials, say a “no” vote would drive Greece out of the euro and into an even more impoverished future.

Greek Finance Minister Yanis Varoufakis told Ireland’s RTE radio Friday that an agreement with the country’s creditors “is more or less done” and that the only issue left is debt relief.

But the head of the eurozone finance ministers’ group, Jeroen Dijsselbloem, harshly rejected those comments, saying negotiations are not still going on.

“There are no new proposals from our side and, whatever happens, the future for Greece will be extremely tough,” Dijsselbloem said. “To get Greece back on track and the economy out of the slump, tough decisions will have to be taken and every politician that says that won’t be the case following a ‘no’ vote is deceiving his population.”

A poll conducted Tuesday and Wednesday and published in To Ethnos newspaper Friday showed the two sides in a dead heat. It also showed an overwhelming majority — 74 percent — want the country to remain in the euro, compared to 15 percent who want a national currency.

Of the 1,000 respondents to the nationwide survey by the ALCO polling firm, 41.5 percent will vote “yes” and 40.2 percent “no,” well within the margin of error of 3.1 percentage points. Another 10.9 percent were undecided and the rest said they would abstain or leave their ballots blank.

Both sides were trying to sway the undecided in rallies Friday evening, to be held 800 meters (875 yards) apart in central Athens. Tsipras was to speak at the “no” rally in the capital’s main Syntagma Square outside Parliament, while “yes” supporters would gather at the nearby Panathenian Stadium, where the first modern Olympics were held in 1896.

The vote could be the most important in Greece’s modern history, but the question is unclear and many voters are confused about what’s at stake.

The Council of State, the country’s highest administrative court, was to rule Friday on a motion brought by two private citizens asking the court to rule the referendum illegal.

Sunday’s vote “is invalid because it expressly violates the constitution, which stipulates that a referendum cannot take place on economic matters,” Spyridon Nicolaou, one of the two filing the motion, told The Associated Press.

“But it’s also invalid because it doesn’t incorporate the text of the documents on which the Greek people are called on to decide. Would anyone from Evros (in far northeastern Greece) know the specific documents?”

A separate group has filed a counter-motion supporting the referendum’s legality. Dimitris Belantis, one of those seeking to ensure the vote goes ahead, claims the Council of State has no jurisdiction over the matter and that the constitution stipulates popular votes can be held on “crucial national matters.”

Much of the ambiguity arises from the complicated question on the ballot paper:

“Must the agreement plan be accepted which was submitted by the European Commission, the European Central Bank and the International Monetary Fund to the Eurogroup of 25 June, 2015, and is comprised of two parts which make up their joint proposal? The first document is titled ‘reforms for the completion of the current program and beyond’ and the second ‘Preliminary debt sustainability analysis.'”

Voters are asked to check one of two boxes: “not approved/no” and — below it — “approved/yes.”

Apostolos Foutsitzis, a 43-year-old medical scanner operator in the northern city of Thessaloniki, said he was confused by the question but plans to vote “yes” because he wants Greece to remain in Europe.

“The referendum is unclear in the way it is being phrased, so I interpret this ambiguity as meaning we might stay in Europe or not,” he said.

Greek banks have been closed during the week-long campaigning to staunch a run, with cash machines allowing daily withdrawals of up to 60 euros ($67) — although in practice this has been reduced to 50 euros as most machines have run out of 20-euro notes.

Some banks opened to let pensioners without ATM cards withdraw up to 120 euros a week, with crowds of elderly people waiting outside the doors for hours. Tsipras has said the measures are temporary.

The country’s bailout package expired Tuesday, and Germany’s finance minister on Friday dampened hopes that a deal for another can be reached quickly.

Wolfgang Schaeuble told Germany’s Bild daily that any negotiations after the Greek vote “will take a while.”

He said that Greece would first have to apply for aid and eurozone finance ministers would then have to consider whether to open negotiations, which would have to be approved by the German Parliament. He insisted that Greece would have to make efforts of its own in return for any aid.

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This story has been corrected to show that the first modern Olympics were held in 1896, not 1894.

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Online: Official referendum websitehttp://www.referendum2015gov.gr/en/

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Costas Kantouris and Derek Gatopoulos in Athens contributed to this report.

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Reuters

Prime Minister Alexis Tsipras rejected European warnings that Greeks will be deciding on their future in the euro zone in a referendum on Sunday, saying negotiations would continue for a better deal with international creditors after the vote.

In a televised address on Friday, Tsipras said a report by the International Monetary Fund which arguing that Greece’s massive public debt could not be sustained without significant writedowns vindicated his advice to reject the lenders’ terms.

Repeating his assault on European partners he accused of blackmailing and issuing ultimatums to Greece, the leftist leader called for calm ahead of Sunday’s ballot, as two opinion polls showed the ‘Yes’ and ‘No’ camps neck-and-neck.

Greek Prime Minister Alexis Tsipras is seen on a television monitor while addressing the nation in Athens, Greece July 3, 2015. REUTERS/ERT/POOL

“On Sunday what is at stake is not Greece’s membership of Europe, what is at stake is whether blackmail will lead us to accept the continuation of a policy which the lenders themselves recognize is a dead end,” he said.

“On Sunday what is at stake is whether we will give our consent to the slow death of theeconomy.”

European policy makers fired fresh warnings of the costs of a ‘No’ vote in a plebiscite called at just eight days’ notice after the breakdown of talks with the European Commission, the IMF and the European Central Bank.

Commission President Jean-Claude Juncker and German Finance Minister Wolfgang Schaeuble dismissed Tsipras’ version that his government would be able to move smoothly to negotiate more favorable terms if Greeks backed his rejection.

“If the Greeks will vote ‘No’, the Greek position is dramatically weakened,” Juncker told a news conference.

Schaeuble, a hate figure for Greek opponents of austerity policies, told Bild newspaper: “Greece needs reforms. But I already know now: These would be very difficult negotiations.”

BRINKMANSHIP

Tsipras is betting Europe will compromise rather than let Greece slip out of the eurozone, even though the continent’s leaders say a “No” vote would signal its exit.

But behind the rhetoric, there were more concrete signs of the pressure Europe can exert on Greece.

The euro zone’s rescue fund, Greece’s largest creditor, said it was reserving the right to call in 130.9 billion euros of debt ahead of time after Athens defaulted on an IMF loan.

One poll by the respected ALCO institute, published in the Ethnos newspaper on Friday, put the ‘Yes’ camp on 44.8 percent against 43.4 percent for the ‘No’ vote. But the lead was well within the pollster’s 3.1 percentage point margin of error, with 11.8 percent saying they are still undecided.

Another survey for Agvi newspaper put the ‘No’ fractionally head with 43 percent to 42.5 percent for the ‘Yes’ and 9 percent undecided.

Given a volatile public mood and a string of recent election results that ran counter to opinion poll predictions, the result is in effect completely open.

With banks shuttered all week, cash withdrawals rationed and commerce seizing up, the vote could decide whether Greece gets another last-ditch financial rescue in exchange for more harsh austerity measures or plunges deeper into economic crisis.

There has been little time for campaigning but Tsipras is due to address a mass rally of ‘No’ supporters in Athens’ central Syntagma Square outside parliament on Friday evening, while ‘Yes’ campaigners plan a rally at the old Olympic Stadium.

Tsipras opponents have pointed to the fact that the referendum is on a deal that is no longer on the table accusing him of recklessly endangering the country’s future.

The ‘No’ campaign has directed much of its venom at Germany, the euro zone’s dominant power and Greece’s biggest creditor.

One poster plastered in central Greece shows a picture of German Finance Minister Wolfgang Schaeuble with the slogan: “For five years he’s been sucking your blood. Tell him NO now.”

The Council of State, Greece’s highest administrative court, is to decide on the constitutionality of the referendum at a hearing on Friday. The Council of Europe, a pan-European democracy and human rights watchdog, has said the vote does not meet its minimum standards.

Two Greek citizens are seeking the suspension of the vote as unconstitutional and illegal, arguing that it was called at too short notice, that the constitution bars questions relating to fiscal policy, and that the question is too complex.

FINANCIAL HOLE

The IMF warned on Thursday that Greece faces a huge financial hole regardless of the outcome of the referendum and would need some 50 billion euros as well as a massive debt writedown.

The assessment, in a preliminary draft of the Fund’s latest debt sustainability report, underlined the scale of the problems facing Athens, whatever government ends up dealing with them.

Tsipras may not survive long if voters ignore his call to vote ‘No’. But even if European leaders are willing to sit down immediately with an Athens government, it may be several weeks before a new bailout is sorted out, European Commission Vice-President Valdis Dombrovskis told Germany’s Die Welt daily.

Any decision on whether to reopen the crippled banks will depend on whether the European Central Bank is ready to restore the emergency funding they need to stay afloat.

That is far from certain as ECB Governing Council member Vitor Costancio made clear when asked whether funding would be restored. “I cannot in advance answer that question,” he said, adding that a ‘No’ vote would make agreement difficult.

“If the result will be a ‘Yes’, then it’s the opposite: it seems it will be easier to reach an agreement,” he said.

Greece’s European partners have made clear they regard the vote as a choice of whether Greeks want to stay in the euro, even though its exit would change the nature of a 15-year-old currency union intended to be unbreakable.

But as the deadline approached, some officials appeared to recognize that after five years of bailout-imposed austerity, even those Greeks who intend to vote ‘Yes’ have little appetite for yet more advice from abroad.

“It’s for Greeks to decide,” said Jeroen Dijsselbloem, chairman of the Eurogroup of euro zone finance ministers when asked by reporters how Greeks should vote. “It’s important for Europe, but important above all for Greece.”

If voters back a bailout plan the government has scorned, Tsipras and Finance Minister Yanis Varoufakis have said they would quit. That would lead to a scramble to either try to put together a national unity government to negotiate a loan deal or call new elections by September.

Already, Tsipras’ coalition is under strain as a succession of deputies from the right-wing Independent Greeks, his junior partners, have backed the ‘Yes’ vote.

Varoufakis, who alienated many euro zone colleagues with his economic lectures and outspoken style, said the IMF’s report vindicated Greece’s demands to put debt relief at the center of the negotiations.

“It is music to our ears because what we have been saying right from the beginning is that the great, big reason why we have a huge crisis here in Greece is because our debt is unsustainable,” he told Irish radio.

(Additional reporting by James Mackenzie in Athens, Julien Ponthus and Ingrid Melanderin Paris and David Chance in Washington; Writing by Paul Taylor and James Mackenzie; Editing by Catherine Evans and Philippa Fletcher)

Chinese media see international bank as diplomatic coup

July 2, 2015

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Chinese President Xi Jinping (front C) poses for a group photo with the delegates attending the signing ceremony for the Articles of Agreement of the AIIB at the Great Hall of the People in Beijing on June 29, 2015. AFP photo

AFP (Beijing)  The creation of the Chinese-led Asian Infrastructure Investment Bank is a bigger coup for Beijing than its hosting of the 2008 Olympics, state-run media said Tuesday after 50 countries signed its legal framework.

China was spurred to create the AIIB after “unfair treatment” by Washington-led institutions, the Global Times said in an editorial, apparently referring to the World Bank and International Monetary Fund.

The AIIB has been viewed by some as a rival to the World Bank and Asian Development Bank, and the United States and Japan—the world’s largest and third-largest economies respectively—have notably declined to join.

Under the articles of association, China will initially have 26% of the votes in the bank, giving it a veto over some key decisions which require a 75% majority—including the choice of the bank’s president, suspensions of members, and changes to the rules.

India will have the second-largest voting percentage at 7.5% and Russia is third with 5.9%.

China’s leadership means its “influence is prominent and far-reaching, and it carries more profound significance than successfully hosting an Olympic Games,” said the Global Times, which is affiliated with the official Communist Party mouthpiece People’s Daily.

Major U.S. allies—including the UK, France and Germany—have all signed on to the bank.

“U.S. allies that have joined the AIIB do not mean to flatter China, but they see the benefits will outweigh their relations with Washington,” the editorial added.

“China’s attempt to lead the international financial institution may have been forced by unfair treatment in other institutions,” it said.

China steps up strategic tie-ups in Asia at expense of US

July 2, 2015

China: As Asean inches closer to establishing a common market, China faces a growing sense of urgency to strengthen its multilateral networks in the region

Richard Javad Heydarian

China’s President Xi Jinping may have confidently advocated an era of a new “great power” relationship with the United States, but this has not stopped Beijing asserting its economic primacy in Asia and challenging the liberal world order.

With the US struggling to maintain its geopolitical ascendancy in the region, and the fate of the Trans-Pacific Partnership free trade agreement in limbo, China is stepping up its efforts at re-configuring the strategic architecture of Asia.

The opportunity to do so comes amid growing frustration among emerging powers with the institutions of global governance.

The decades-old Bretton Woods system of monetary management is still dominated by the West, which enjoys disproportionately high levels of decision-making powers within the World Bank and the International Monetary Fund (IMF). China is creating new spaces to deepen its influence which, in turn, will give it more leverage to enhance its position within the Bretton Woods system.

Chinese President Xi Jinping and his Russian counterpart Vladimir Putin at the recent Shanghai Cooperation Organisation summit in Tajikistan. Beijing is keen to consolidate its influence in Central Asia and strengthen its strategic partnership with non-Western powers such as Russia, Iran and Turkey. AFP photo

New networks

A striking example is how it has been a primary force behind the establishment of new cooperative networks that fall outside the American sphere of influence.

These range from sub-regional groupings like the Shanghai Cooperation Organisation (SCO) to broader pan-Asian platforms like the Conference on Interaction and Confidence Building Measures in Asia (Cica), which allow Beijing to consolidate its influence in Central Asia and strengthen its strategic partnership with non-Western powers such as Russia, Iran and Turkey.

During Cica’s fourth summit, held in Shanghai in May, Mr Xi boldly called for member states to innovate security cooperation and establish a new regional security cooperation architecture, warning the US against interfering in Asian affairs.

And during the just-concluded SCO summit in Tajikistan, Mr Xi held talks with top generals from other member countries and welcomed improved strategic ties with Iran, which is seeking full membership in the organisation.

On a global level, China has stepped up its strategic partnership with emerging powers India, Russia, Brazil and South Africa, among others. The Bric grouping (Brazil, Russia, India and China) began holding regular summits in the aftermath of the 2007-08 global financial crisis.

These culminated in the establishment of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) this year. To give teeth to their newly created financial institutions, the Brics pledged an initial amount of US$100 billion (S$127 billion) to the NDB and CRA, respectively.

China is a major trading partner of all other Brics members, and has served as a key source of capital for infrastructure-related projects in those countries.

Given China’s substantial trade with all the other Brics, they are also looking at undermining the hegemony of the US dollar as the global reserve currency by diversifying their currency reserves and launching and expanding alternative currency swap mechanisms, with the Chinese yuan potentially serving as a key trading currency alternative.

The NDB, with its headquarters in Shanghai, meanwhile, symbolises the emergence of China as a central player in the global development landscape.

With respect to the CRA, China is the largest contributor, responsible for almost 40 per cent of the total pledged fund.

The newly established institutions are quite small in comparison to the IMF, which holds about US$800 billion in its coffers, and the World Bank, which lends as much as US$60 billion annually.

Over time, however, the NDB and CRA are poised to expand in terms of their budget and capabilities, thanks to the Brics’ large pool of currency reserves (over US$5 trillion) as well as their legions of highly-skilled development experts, who would oversee the operations of the two newly created financial mechanisms.

Wooing Asean

As Asean’s top trading partner, China has also stepped up its investments in the region, with the soon-to-be-established Asian Investment Infrastructure Bank (AIIB) poised to compete with the Japanese-dominated Asian Development Bank (ADB) and serve as the backbone of China’s Maritime Silk Road initiative, which seeks to integrate South-east Asia into an evolving global trading regime under Beijing’s auspices. The new proposed bank will have start-up capital in the range of US$50 billion to US$100 billion – more than sufficient to give China an added voice in shaping the infrastructure landscape in the region.

With the US’ top allies, Japan, South Korea and Australia shunning the AIIB – they were absent during the bank’s founding ceremony, attended by 21 Asian countries – Beijing’s dominance in the new institution will be further reinforced. After all, the pro-active participation of America’s rich allies in the AIIB could have acted as a counterweight to China, paving the way for a more balanced, multi-polar configuration within the development institution.

But Washington and its allies have refused to legitimise what they see as a Beijing-dominated initiative, which supposedly overlaps with the mandate – if not contradicts the “good governance” and sustainability principles – of existing institutions such as the ADB and the World Bank.

Asean is home to rapidly developing economies such as Indonesia, the Philippines, Myanmar and Vietnam – all in desperate need of capital and technology to improve their basic infrastructure. The infrastructure spending gap in Asean stands at almost US$800 billion per year, far exceeding the lending ability of existing multilateral development agencies such as the ADB and the World Bank.

China – with almost US$4 trillion in its foreign exchange reserves and one of the world’s most impressive track records in infrastructure development – is in a strong position to cover a growing proportion of the booming infrastructure needs of its South- east Asian neighbours.

If anything, as Asean inches closer to setting up a common market, there is a growing sense of urgency.

For Beijing, the AIIB could serve as a multilateral channel to invest its huge capital reserves in neighbouring states, making China an even more consequential player in South-east Asia’s economic development.

Collectively, China-driven regional initiatives help strengthen its strategic depth in its own backyard. While the AIIB’s precise contours are yet to be defined, there is lingering concern that China will utilise its economic influence towards geopolitical ends.

For instance, growing dependence on China for trade, investment and capital could affect Asean countries’ ability and willingness to confront Beijing on sensitive issues such as the territorial disputes in the South China Sea. For critics, Beijing has leveraged – and will continue to do so – its economic power to frustrate efforts towards a unified regional front among Asean countries, specifically on the issue of developing a legally binding Code of Conduct in the South China Sea.

Overall, by offering large-scale financial incentives (AIIB), upgrading alternative regional platforms (Cica), and establishing new global institutions (NDB), China could be gradually carving out a new zone of deference in its neighbourhood – at the expense of the US and its regional allies.

stopinion@sph.com.sg

The writer is a political science professor at De La Salle University in the Philippines.

S.E.A. View is a weekly column on South-east Asian affairs

http://www.straitstimes.com/opinion/china-steps-up-strategic-tie-ups-in-asia-at-expense-of-us

Athens Capitulates: Greece Will Accept Bailout Deal

July 1, 2015

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A pro-European Union protester waves an EU flag during a demonstration in front of the parliament

A pro-European Union protester waves an EU flag during a demonstration in front of the parliament  Photo: AFP

Merkel tells Tsipras: You Called The Referendum So We’ll Wait Until That’s Over to Discuss The Next Deal

July 1, 2015

Greek prime minister Alexis Tsipras reportedly offers concessions. Photograph: Petros Karadjias/AP

By Nick Fletcher
The Guardian

No negotiations on new bailout before referendum, says Merkel

German chancellor Angela Merkel has said there will be no negotiations on a new bailout for Greece before Sunday’s referendum.

She said that, just as the Greeks have a right to hold a referendum, the other 18 euro countries have a right to react and have an opinion.

And she said the door for talks with Greece was and remains open, although Greece has not fulfilled its obligations and with the expiration of the second bailout programme, the last Eurogroup proposals also expired.

Merkel: Third bailout for Greece cannot be discussed without Bundestag approval

Merkel: Europe is capable of compromise – but all need to move. Compromise can be reached when advantages outweight disadvantages.

http://www.theguardian.com/business/live/2015/jul/01/greek-debt-crisis-creditors-consider-next-moves-after-imf-default-live

Related:

Greek Banks Re-Open on Wednesday — Greece’s last-minute bailout proposal on the table

July 1, 2015

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lose to 1,000 banks re-opened in Greece on Wednesday for pensioners without bank cards

The Associated Press

ATHENS, Greece — Crowds of anxious elderly Greeks thronged banks for hours from before dawn Wednesday, struggling to be allowed to withdraw their maximum of 120 euros ($134) for the week, after Greece reopened some banks to help pensioners who don’t have bank cards.

The often chaotic scenes came hours after Greece’s bailout program with European creditors expired and it failed to repay a debt to the International Monetary Fund, the first developed country to do so. The last country to miss an IMF payment was Zimbabwe in 2001.

The expiry of its bailout and the missed IMF payment left Greece cut off from vital financing and pushed it one step closer to leaving the euro. The IMF cannot lend money to a country that is in arrears.

The eurozone’s finance ministers are set to weigh a last-minute Greek proposal for a new aid program, submitted Tuesday afternoon, in a conference call later Wednesday.

Markets appear to have taken in stride the latest developments, with investors still hopeful that a deal may emerge in the days ahead that would prevent Greece from leaving the euro. The Stoxx 50 index of leading European shares was up 0.6 percent while Germany’s DAX was 0.6 percent higher.

The deadlines on Greece’s bailout and IMF payment expired after a tense weekend during which Prime Minister Alexis Tsipras announced he would put a deal proposal by Greece’s international creditors to a referendum on Sunday and urged a “No” vote.

The move increased fears the country could soon fall out of the euro currency bloc and saw Greeks rushing to pull money out of ATMs, leading the government to shutter its banks and restrict banking transactions. Greeks are now limited to ATM withdrawals of 60 euros ($67) a day and cannot send money abroad or make international payments without special permission.

European officials and Greek opposition parties have been adamant that a “No” vote on Sunday will mean Greece will leave the euro and possibly even the EU. The government rejects the argument as scaremongering, and says dismissing creditor demands will mean the country is in a better negotiating position.

However, government officials have begun hinting that the referendum might not go ahead if agreement with creditors is reached this week.

“Look, if a deal is found, there is a chance there could be this possibility too. Everything is developing,” Health Minister Panagiotis Kouroumplis said when asked during a morning news show on Antenna television whether the referendum could be called off under certain circumstances.

On Tuesday night, Deputy Prime Minister Yannis Dragasakis hinted the same. The government decided on the referendum, he said on state television, “and it can make a decision on something else.”

It was unclear, however, how that would be possible as Parliament has already voted for the referendum to go ahead.

With many elderly Greeks unable to access any money without bank cards, the government said about 1,000 bank branches across the country would open for three days starting Wednesday to give them access to some cash.

But a seeming last minute decision to serve customers on an alphabetical basis, announced by some banks overnight and by others in the morning, led to chaotic scenes of confusion and anger, with many pensioners waiting for hours from before dawn to be eventually told they would have to return Thursday or Friday.

Others were told their pensions had not yet been deposited and they would therefore have to return later in the week.

“It’s very bad,” said retired pharmacy worker Popi Stavrakaki, 68. “I’m afraid it will be worse soon. I have no idea why this is happening.”

Meanwhile, many ATMs had run out of 20 euro notes, meaning the maximum they would dispense per day was one 50 euro note per bank card, effectively cutting the amount of cash Greeks have access to.

Capital controls will remain in place until at least next Monday.

“I don’t have a lot of money, but I have to buy medicine. It’s important,” said 62-year-old Nikolaos Agonatos.

The eurozone’s 19 finance ministers to discuss Greece’s last-minute proposal Wednesday afternoon, with Jeroen Dijsselbloem, the eurozone’s top official, saying the meeting’s time was pushed out from the morning at the request of several ministers.

Greece’s latest offer involves a proposal to tap Europe’s bailout fund — the so-called European Stability Mechanism, a pot of money set up after Greece’s rescue programs to help countries in need. It does not include the IMF.

Tsipras’ office said the proposal was “for the full coverage of (Greece’s) financing needs with the simultaneous restructuring of the debt.”

Speaking on a late-night television interview Tuesday, Dragasakis said the new proposal “narrows the differences further” between Athens and its creditors.

“We are making an additional effort,” he said. “There are six points where this effort can be made. I don’t want to get into specifics. But it includes pensions and labor issues.”

On international markets, shares in Japan and Hong Kong rose slightly Wednesday as investors watched to see the next step in the Greek saga.

“International markets appear to have found a level where they are happy to sit and wait on the next developments in the Greek debt crisis. Greece’s failure to meet the deadline on its IMF payment looks to have been fully anticipated by markets. Barring unknowns, the next critical event for markets will be the outcome of Sunday’s referendum,” Ric Spooner, chief market analyst at CMC Markets, said in a commentary.

____

Gregory Katz in Athens contributed to this report.

*******************

From BBC News

Greece has missed the deadline for a €1.5bn (£1.1bn) payment to the International Monetary Fund (IMF), hours after eurozone ministers refused to extend its bailout.

But the ministers say they will discuss a last-minute request from Greece for a new two-year bailout on Wednesday.

Greece is the first European Union country to fail to repay a loan to the IMF and is now formally in arrears.

There are fears that this could put Greece at risk of leaving the euro.

The IMF confirmed that Greece had failed to make the payment, shortly after 22:00 GMT on Tuesday.

“We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared,” said IMF spokesman Gerry Rice.

null

Pensioners are being allowed a one-off withdrawal of up to €120

Mr Rice confirmed the IMF had received a request from Greece to extend the payment deadline, which he said would go to the board “in due course”.

With the eurozone bailout expired, Greece no longer has access to billions of euros in funds and could not meet its IMF repayment.

The European Central Bank (ECB) has also frozen its liquidity lifeline to Greek banks. Meanwhile, ratings agencies have further downgraded the country’s debt.

null

Analysis: Chris Morris, Europe correspondent

This is not how international diplomacy or finance is supposed to be conducted: a series of confusing last minute proposals in an atmosphere of mounting chaos.

Without another bailout, Greece is in dire straits – cut off from all international financing, and skating on dangerously thin ice.

If it can’t repay a debt to the ECB on 20 July, that would probably be the end. It is running out of options to keep it in the eurozone.

Part of the new deal Greece has suggested would involve a restructuring of its huge debts – but some of its proposals will not be acceptable to other eurozone countries. So there is uncertainty at every turn, and plenty of public posturing as Greece prepares for a referendum on Sunday.

Just to confuse matters still further, some EU officials have suggested that there have been indications from the Greek authorities that if the outlines of a deal can be done in the next couple of days, the referendum could even be cancelled.

Is Grexit nearer?

A guide to the key numbers and issues

New bailout ‘considered’

Eurogroup chairman and Dutch Finance Minister Jeroen Dijsselbloem earlier said it would be “crazy” to extend the Greek bailout beyond its Tuesday deadline as Athens was refusing to accept the European proposals on the table.

Greece’s left-wing Syriza government, elected on an anti-austerity platform, has been in deadlock with its creditors for months over the terms of a third bailout.

Speaking after the conference call with other eurozone ministers, Mr Dijsselbloem said that a Greek request for a new €29.1bn European aid programme would be considered in a telephone conference on Wednesday.

The call will take place at 15:30 GMT.

http://www.bbc.com/news/world-europe-33339363

IMF Says Greece Defaults on Debt: “Uncharted Territory”

June 30, 2015

AFP

Pro-euro protesters demonstrate in front of the parliament building in Athens on June 30, 2015

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WASHINGTON (AFP) – Greece fell into default on its debt to the International Monetary Fund on Tuesday after missing a 1.5 billion euro ($1.7 billion) payment, the global lender said.
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“I confirm that the SDR 1.2 billion repayment due by Greece to the IMF today has not been received. We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared,” said Fund spokesman Gerry Rice.

Greece on Tuesday asked for a new bailout — Is the 3rd bailout the charm? Last-minute diplomatic push

June 30, 2015

Published: June 30, 2015 11:02 a.m. ET

Greek Prime Minister Alexis Tsipras. Reuters photo

Greece on Tuesday asked for a new bailout amid a last-minute diplomatic push to seal some kind of agreement before the country’s current rescue deal expires and it defaults on a payment to the International Monetary Fund.

The Greek government submitted a proposal for a two-year agreement with the eurozone bailout fund in order to cover its financing needs and restructure its debt, according to a statement issued by Prime Minister Alexis Tsipras’s office.

Eurozone finance ministers will discuss the Greek request in a conference call Tuesday night, said Jeroen Dijsselbloem, the Dutch finance minister who presides over these talks.
There are big questions over whether the eurozone would consider Greece’s request. While European officials have said that a new aid program would be possible, it would require Tsipras to accept the policy overhauls and budget cuts he has so far rejected. Many officials also don’t trust Tsipras and his government to implement these measures.

A spokesman for the European Stability Mechanism, the bailout fund, declined to comment on whether a request had been received.

An expanded version of this story is available on WSJ.com

Greek situation appears to be in a “holding pattern” — Monday’s selloff gives way to cooler heads — Last-minute diplomatic push was under way

June 30, 2015

European markets remained under pressure Tuesday, as investors cautiously awaited new developments in the Greek debt crisis.

Stocks and bonds fell and the euro inched lower against the U.S. dollar, but the moves were small compared with the day-earlier selloff.

On Monday, equities and bonds slumped following a tumultuous weekend for Greece after the government in Athens’s surprise announcement that it plans to hold a referendum this Sunday on whether to accept the terms that creditors are offering in return for more bailout funds.

On Tuesday, a last-minute diplomatic push was under way to seal some kind of agreement between Greece and its creditors before the country’s bailout expires and it defaults on a payment to the International Monetary Fund.

But many traders and investors said they were hesitant to make further big bets until there is meaningful news, or until Sunday’s vote.

“We are waiting and seeing and we will only trade ahead of Sunday if we get a very strong signal or news,” said Wouter Sturkenboom, an investment strategist at Russell Investments, which has around $272 billion in assets under management.

By midafternoon, the Stoxx Europe 600 was 0.9% lower, having on Monday recorded its largest single-day percentage decline since October.

Italy’s FTSE MIB and Spain’s IBEX—two indexes that suffered particularly sharp falls Monday—gave up small gains to move slightly lower. Recently the FTSE MIB was 0.1% lower, and the IBEX was down 0.3%.

Greek bond yields surged anew, but elsewhere in debt markets moves were limited. Yields on German 10-year government bonds were broadly steady at 0.78%. Yields fall as bond prices rise. In the U.S., the S&P 500 was 0.3% higher in early trade.

Spanish and Italian bonds recovered slightly after Monday’s losses.

Monday’s market turmoil was triggered by Greece over the weekend shutting down its banking system for six days as the nation’s central bank moved to impose controls to prevent money from leaving the country.

Greece’s stock market will remain closed this week along with the country’s banks.

Early on Tuesday, the Luxembourg Bourse announced that it had suspended trading of bonds issued by Greece’s biggest banks until further notice. It has also suspended trading in sovereign bonds and debt issued by Greek national railway company Hellenic Railways.

Bond trading platform Tradeweb said it had blocked trading in a number of Greek government bonds after a notification from the U.K. regulator.

Traders said turnover in Greek government debt has ground almost to a halt this week.

Greece on Monday said it would default on a €1.55 billion ($1.73 billion) International Monetary Fund payment due Tuesday—the day its current bailout program expires—though many investors said they had expected this.

After the European stock market close on Monday, Standard & Poor’s Ratings Servicesslashed Greece’s credit rating deeper into junk territory and speculated that the probability of the country exiting the eurozone is now roughly 50%. Investors’ reaction to that news was muted, too.

ENLARGE

“This is clearly now a fast-moving situation and it is still unclear as to how it will play out,” said Gary Jenkins, a credit strategist at London-based asset manager LNG Capital.

“The situation is fluid, headline-driven and subject to changes in direction,” said Tom Levinson, a strategist at Sberbank

For the time being, the Greek situation appears to be in something of a “holding pattern” said Simon Derrick, chief market strategist at BNY Mellon.

The euro was 0.3% lower Tuesday against the dollar, at $1.118.

Brent crude was 1.5% higher at $62.98 a barrel. Gold lost 0.8% to trade at around $1,169.80 a troy ounce.

Write to Josie Cox at josie.cox@wsj.com


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