Are the Euro bosses going to throw Greece out of the Euro as they said they would ?

Before the Greek referendum the consistent message from the European Commission, the Euro group of ministers, and from the large Euro country governments was the same. The referendum was not about whether Greece should accept the last terms from the Euro group and EU or whether it should reject them. The referendum they said, was about whether Greece wanted to stay in the Euro or not.
Germany’s Vice Chancellor said on the record that a No vote was a vote “against remaining in the Euro”. The President of France said the vote was about “whether the Greeks want to stay in the Eurozone.” Signor Renzi of Italy said the vote was about the “Euro versus the drachma”. As they knew the Greek government and people wanted to stay in the Euro come what may and were not about to ask to leave, they were clearly saying they would drive Greece out of the currency if she voted No.
So how are they going to bring this about? Will they do it by a sensible agreement, keeping Greece’s banks going in the meantime whilst Greece sets up her own currency arrangements? Or are they going to do it the nasty way, by continuing to refuse the Greek banks access to more cash, in an effort to bring the Greek banks down in a hurry and force the pace of establishing a new Greek currency?
Or were these words all foolish hot air? Will the Euro area now meekly pay up, send Greece the money it needs to keep going, and sit down again at the negotiating table to try to come up with another compromise which is better for Greece than the last one on offer? If they do that, will they this time try and find a lasting solution, instead of more extend and pretend credit that does not tackle the underlying weakness of the Greek economy?
Which ever way, the credibility of the Euro bosses is gravely compromised by this dreadful situation they have helped create. If they decide to co-operate, lend to Greek banks enough money, help the Greek state meet its debts, and discuss changes of economic policy to try to get the Greek economy growing again, they will have to eat all the words they have spoken in haste in the last week. They send exactly the signal they wished to avoid, that if a country gets into a big enough mess they will be bailed out by the taxpayers of other states of the zone. If they continue to dig in and refuse to support Greek banks they may well drive Greece out of the Euro, after doing yet more damaged to the Greek economy. It is time they rose to their responsibilities. It is time they understood how democracy works. It is time they realised they and the IMF have lent too much already on the wrong terms, and have now to find a way out for themselves and for Greece.

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33 Comments

  1. MARGARET
    Posted July 5, 2015 at 9:01 pm | Permalink

    They cannot pay up if they havn’t got the money. This is how all bankrupts go about their business.

    • Hope
      Posted July 6, 2015 at 8:22 am | Permalink

      JR, Cameron needs to be held account why he is adamant for staying in the EU when Shultz and others make it clear that they do not believe in the nation state.

      A week ago Shultz said the UK belonged to the EU, a few days ago he was advocating that the elected government of Greece was removed for a technocratic EU Government. A civilian coup by the EU of a national Greek government was achieved a few years ago when the Greek PM was going to offer his nation a referendum and must be taken seriously as the vile organisation it is. These EU fanatics will stop at nothing. We saw this first hand by Tory fanatics with the disposal of Margaret Thatcher. The people elected her and yet her MPs got rid of her?

      What position is Cameron taking? Is he for democracy of the nation state trading as friends with other countries or wanting the UK to be subsumed into a region of a superstate. Either the UK is in or it is out. The EU leaders have made it clear that serious reforms are not on offer ie free movement of people, ever closer union etc. The renegotiation nonsense needs to stop. It is a sham. Is the meeting with the chancellor and Bank of England Governor about scaring us if we were to leave the EU.

      • Boudicca
        Posted July 6, 2015 at 4:04 pm | Permalink

        Well said.

        I find our association with an anti-democratic organisation, which thinks it has the right to instigate regime change in a supposed ally, absolutely disgraceful.

        Cameron seems determined to keep us in, which is why I refuse to vote Conservative.

      • Hefner
        Posted July 6, 2015 at 6:19 pm | Permalink

        Strictly speaking, you are wrong. The British people elected their MPs. The winning party put its leader as head of Government. After a while, if the MPs of the governing party got the feeling that the leader was becoming (even more) autocratic, it is the very right of MPs to choose another leader.
        Given the British electoral system, it is not surprising that different flavours can be found within a given party.
        I do not see anything wrong in that. Otherwise, would you want a communist Politburo?

        • Hope
          Posted July 7, 2015 at 8:28 am | Permalink

          I am aware of the procedure you describe, that does not alter my point one jot. It was the Tory EU fanatics that went on manouvres to oust Thatcher.

          Ironically Heseltine recently claimed that the PM won the victory for the Party implying the MPs should shut up and do as they are told. Perhaps your advice would be better directed towards him?

  2. DaveM
    Posted July 5, 2015 at 9:16 pm | Permalink

    No, of course not. As you know, the pet political project is too important.

    The debt will be written off in some underhand way which makes it look as if the Eurozone leaders have won, and Juncker’s lifetime project will roll on.

    I genuinely hope I’m wrong because I’d like to see the whole thing crumble to dust, but I don’t think I am.

    • Sandra Cox
      Posted July 5, 2015 at 10:17 pm | Permalink

      John, talking of debt and of Juncker, has the €38 billion “loan” that Juncker was “requesting” recently from UK taxpayers been handed over by Osborne?

      Apparently, the €38 billion was for the EU slush fund to relaunch the European economy.

      John, do you know exactly how this further tranche of UK taxpayer debt has been or will be applied to assist others in the EU community?

      Thank you.

  3. alan jutson
    Posted July 5, 2015 at 9:20 pm | Permalink

    Many of us on this site have suggested that the EU will eventually all end in tears as the populations of individual Nations become more Nationalistic, simply due to the requirement of ever closer union, meaning less democracy for those individual Nations.

    First we had the Cyprus debacle where they tried to steal the peoples money, now we have the financial meltdown in Greece, all in 12 months.

    Will the Germans want to bail out Greece and any others that follow,?

    I think the German people have had enough.

    I think Greece will have to resolve its own problems, and the IMF may help them out as a last resort if they leave the Euro, with more money and some debt relief, in the meantime if that happens then the Euro Zone may well have to take a 100% haircut.

  4. JoeSoap
    Posted July 5, 2015 at 9:24 pm | Permalink

    “and have now to find a way out for themselves and for Greece. ”

    My guess is they will take the risk of bailing out the Greeks and building up trouble for the future in Spain, Italy, Portugal and France. The project will go on for now, but not for ever.

    Meanwhile, like the old Etonian turning up after a drunken brawl in a “spit and sawdust” bar, asking for a G and T, Cameron will be shown the door in pretty short order. So long as he doesn’t drag us in to the Euro to bail this lot out….

  5. Peter van Leeuwen
    Posted July 5, 2015 at 9:49 pm | Permalink

    If Britain wants to lend more money to keep the Greek banks open a bit longer, it can do it through the IMF or even directly. In spite of this bullish blog I doubt it will want to lend a hand to Greece. It is much more fun to put all the blame on the euro bosses, especially for those with ulterior anti-EU motives.
    The opinion of 11 million Greeks has been sought, be it on a incomprehensible question and with no time to debate the real issues. At some stage the opinion of the other 310 million people in the Eurozone has to be asked, either through their parliaments accepting a future deal or even by referendums if governments so chose. I doubt that EZ tax payers will be willing to lend any more money to Greece without very credible and enforceable reforms. Maybe Greece will want to introduce a parallel currency and still “stay” in the eurozone.

    Reply We have no wish to give or lend a penny to any country in the zone – it’s your mistake and you have to pay to sort it out. I have set out the options. I recommend Greece leaves the Euro, with the zone helping her to get out. It’s the Euro area and ECB responsibility to sort out the Greek banks immediately.

    • Lifelogic
      Posted July 6, 2015 at 4:41 am | Permalink

      Peter how can you be so daft? The reply is spot on, it is an entirely predictable disaster made by the EU euro zone lunes. The Greeks should leave and default, they will have too in the end. Then they will be forced to acres their bloated state sector and economic incompetence.

      • Peter van Leeuwen
        Posted July 6, 2015 at 9:52 am | Permalink

        @lifelogic: You obviously haven’t studied the Greek referendum question to “accept” an expired proposal very deeply:

        Should the plan of agreement be accepted, which was submitted by the European Commission, the European Central Bank, and the International Monetary Fund in the Eurogroup meeting of 25 June 2015 and comprises two parts, which constitute their unified proposal?
        The first document is entitled “Reforms For The Completion Of The Current Program And Beyond” and the second “Preliminary Debt Sustainability Analysis.”
        ❑ Not approved / NO
        ❑ Approved / YES
        I’ll spare you by not including the two lengthy documents.

        Interesting that you command the Greeks what to do now. I doubt that they are listening to you.

    • Alan
      Posted July 6, 2015 at 6:35 am | Permalink

      How can Mr Redwood say it is the Eurozone and the ECB’s responsibility to sort out the Greek banks? The Greeks have emphatically voted ‘no’ to Eurozone intervention. That necessarily implies they wish to sort out their own problems, by themselves.

      It doesn’t matter how one divides up responsibility for getting to this situation. What matters is how the Greeks deal with their problems now.

      Reply The ECB is the central bank to the Greek banks with clear legal obligations and duties.

      • Alan
        Posted July 6, 2015 at 7:26 am | Permalink

        The ECB’s clear legal obligations and duties do not include making loans to the Greek Central Bank without collateral, and the Greek voters have just voted not to accept the agreement that would have given value to the Greek bonds that provide that collateral.

        We may not approve of what the Greeks have voted for,but we do have to accept that they have come to a decision, and respect their choice.

        • Hope
          Posted July 6, 2015 at 8:26 am | Permalink

          Yes JR, and the Greek PM has played ma blinder to force the EU hands. Cameron does not have the will or political backbone to negotiate a pi55 up in a brewery.

    • Know-Dice
      Posted July 6, 2015 at 6:50 am | Permalink

      @PvL

      According to a journalist from “Le Soir” it’s democracy for the Greeks to decide if they want to accept or reject the bale-out deal that was on offer (but now withdrawn), but it’s “solidarity” for the rest of the Euro Zone to pay to keep the Greeks in the Euro and Euro Zone without any referendum…

      • Peter van Leeuwen
        Posted July 6, 2015 at 9:59 am | Permalink

        @Know-Dice: Of course it is democracy for the Greeks to take such a decision (in spite of the rightful criticism about the incomprehensible referendum question and the much too short time for Greeks to understand and decide).

        I hope that the rest of the eurozone will show solidarity (with or without a referendum) but as you cannot keep pouring water into a bucket with a number of gaping holes, Greece will have to come up with a credible plan how to fix those holes. Greek credibility has been in very short supply.

    • Denis Cooper
      Posted July 6, 2015 at 11:32 am | Permalink

      Well, JR, when you say “it’s your mistake and you have to pay to sort it out”, I would very much like to make that personal by seizing the assets of all those eurofanatics like Peter who have consistently urged the peoples of Europe down this disastrous course and using that money to pay off the debts of the Greek government, rather than allowing the true authors of the catastrophe to get away with spreading the burden among those who they misled. It is unfortunate that there is no practical way to do that, as it would be the just solution.

  6. JoeSoap
    Posted July 5, 2015 at 9:57 pm | Permalink

    The government now has to take a line on this. They either back the Troika in dealing in a technocratic way with the Greek problem, or they back the Greek democratic decision. No more sitting on the fence.

  7. Stevie
    Posted July 5, 2015 at 10:02 pm | Permalink

    If it were a undemocratic state in African rather than Greece the British Government would be falling over themselves to donate hundreds of millions of pounds of our money, so where are they now, very quiet. I think.

  8. stevie
    Posted July 5, 2015 at 10:10 pm | Permalink

    If it were a undemocratic state in the world rather than Greece the British Government would be falling over themselves to donate hundreds of millions of pounds of our money to support their democratic decision , so where are they now, very quiet.?

  9. CHRISTOPHER HOUSTON
    Posted July 5, 2015 at 10:12 pm | Permalink

    Well if Mr Juncker and Ms Lagarde were heads of political parties I guess they would have to stand down and be replaced by others. But in Euroland Mr Juncker could very well remain in post or be promoted or perhaps recommend a close relation to take over the reins of power.

    Ms Lagarde’s future however is far from certain.

    Mr Cameron will find it difficult to upstage the leader of the Greeks in his negotiations.
    Geo-political considerations will prevent Russia or China from stepping in to support Greece. But NATO and the US will one way or another move EURO leaders to sort something out. If they do not, Greeks may eventually turn away not just from the Euro but modern Capitalism which in one referendum has been stripped of its clothes and found to have a zombie-like body.
    .

    • Alan
      Posted July 6, 2015 at 10:30 am | Permalink

      Mr Juncker was the “lead candidate” of the European Peoples party, which won the most seats in the European Parliament election. That’s how he got the job of President of the Commission.

  10. Cyril Renton-Pickles
    Posted July 5, 2015 at 10:26 pm | Permalink

    What strikes me is the dogmatic and frankly imperialist quality of the EU’s attitude. I offer, as an example of what I mean, the Frenchman who told us that we couldn’t go “a la carte” in our relations with Brussels. Why not? What on earth is wrong with varying degrees of association? The merest private club can manage it – country members, visiting members, honorary members and so on. Those countries which really wish to sink their old identities in a new superstate could easily do so without forcing the rest of Europe to join. If that state functioned well, others might be attracted to it. Instead of this we have a peevish all or nothing, black and white, with-us-or-against-us approach which recalls the posturing of the hard left. It has quite simply got to stop.

  11. petermartin2001
    Posted July 5, 2015 at 10:28 pm | Permalink

    ” …..or are they going to do it the nasty way, by continuing to refuse the Greek banks access to more cash, in an effort to bring the Greek banks down.. “?

    I hope I’m wrong but this is what I’d expect.

    I hope also I’m wrong in saying that if the Greek banks don’t open in the next few days it won’t be just the banks that are brought down but Greek democracy too. The military have the perfect cover for stepping in. The reasons they’ll give will be all too predictable.

    The EU needs to allow Greeks full access to their bank accounts. The sensible thing for everyone is to get out their remaining money in cash. That’ not going to be a cheap option for the EU but its their currency and they have to take responsibility and honour its value. Then the Greeks can start again with their own currency.

    • Ted Mombiot
      Posted July 6, 2015 at 5:36 am | Permalink

      What haapened in Cyprus gives me little confidence to believe that your scenario will happen.
      The way Cyprus was treated by the EU will very sadly be the way Greece is treated.
      Ambitions for an EU superstate are greater than their need to treat the people og Greece with decency

  12. ChrisS
    Posted July 5, 2015 at 11:08 pm | Permalink

    I think that Merkel and Hollande’s only way out of the mess they have created is to make an example of Greece.

    Backing down, bailing out Greece and then giving them debt relief will just encourage the Spanish opposition to go down similar lines when, and not if, they win power in the Autumn. That will only be the start of a process.

    They have to frighten off any other country demanding debt relief and their only weapon is the threat of being thrown off the Euro Express Train.

    Of course that will only work until Greece shows signs of recovery outside the Euro and it is a threat than can never be uttered in public in respect of a larger country.

    Question then is, can a Left Wing Government in Athens, freed from the tyrany of the Euro, deliver sufficient reform and a sound economy. Doubtful !

  13. formula57
    Posted July 5, 2015 at 11:14 pm | Permalink

    Will the Greeks not just have to re-run their referendum until they produce the result desired by the Eurocrats?

    Meanwhile, Deutsche Bank in discussing procedures for any Grexit note “…exit could be agreed by mutual agreement. There is a view that Article 352 of the Lisbon Treaty might provide a basis for such an approach. It requires the unanimous agreement of the European Council, i.e. all EU countries in the EU including Greece.”. Let us hope that the UK government is ready to use its veto, guided solely by UK national interests and not facilitating matters for either Greece or the EU.

    • Lifelogic
      Posted July 6, 2015 at 4:42 am | Permalink

      Not much chance of that with Cameron.

  14. Leslie Singleton
    Posted July 6, 2015 at 1:30 am | Permalink

    When Siriza started to fear they might lose, they were loudly saying that the vote had nothing to do with the Euro or the EU. Funny how, now that they have in fact won (won the referendum that is, not much else), all of a sudden it was in fact a vote for these things. Presumably it would be “illegal” under the dreaded Treaties to “throw out” Greece even assuming an ad hoc mechanism could be conjured up and unanimously agreed and quickly but on any basis I presume that the Greek Central Bank cannot force the ECB or anybody else to lend or give them Euros to onlend,, so the only honest way forward is to step up to forcing a rapid default. Why anybody would want under any circumstances to lend or give more I cannot imagine. It would be beyond belief ridiculous to start afresh on a new deal. Just imagine the chances that this government would ever implement anything worthwhile. It gets more unarguable all the time that Greece simply does not belong in the Euro.

  15. Lifelogic
    Posted July 6, 2015 at 2:02 am | Permalink

    I doubt it but the EU have to be seen to be playing hard ball, to deter all the others in the long queue.

    The can thus will keep being kicked down the road so as to extend and pretend for a bit longer in some contrived way. Doubtless Cameron and Osborne will continue to piss more UK borrowed money into it too, in some contrived and partially hidden way.

  16. Bert Young
    Posted July 6, 2015 at 8:31 am | Permalink

    Parents who go on feeding an unhealthy and overweight child would be foolish and punished one way or another . That the child needs help is beyond dispute ; taking it into care would deny it the psychology of the home . It’s the parents who need the discipline and control ; if they do reform the health of the child will benefit .

    The head swollen bureaucracy of the EU has taken things too far . The belief that it could build itself into a unity without the glue of common standards was simply a dream . There are substantial differences in the N and S of Europe too much for any sort of dictat to try to bring together . These differences are a delight to sample when one visits ; they are the life blood of these countries and should never be interfered with .

  17. BobE
    Posted July 6, 2015 at 12:13 pm | Permalink

    I love Europe and all the different countries, ways, mores and languages. I hate the EU.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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