Greece decided to repay her debt owed to the IMF, after press speculation that she might not. Greece did not apparently ask Mr Putin for money. Mr Putin for his part is reported as offering to buy privatised assets in Greece, a far from helpful comment to a government elected to stop privatisation. Greece has also managed to borrow another Euro 1.14 billion this week by selling 6 month Treasury Bills. So far, so orthodox.
It is true the Euro area had to grant permission for the Treasury Bill sales. It is also true the European Central Bank keeps lending to the commercial banks if they lose deposits. So far, so orthodox by them as well. Both parties are currently behaving as if they have a normal relationship. The Euro area hopes to wake up one morning soon and find a proper Greek programme to cut the budget and live according to the loan agreements. Greece hopes to wake up one day to a Eurozone which agrees austerity has to end and money has to be given to Greece to allow some growth and some relief from past debts.
The Euro area does not want to force Greece out of the Euro, but does the bare minimum to allow the Greek state to continue to function. Allowing more 6 month Treasury Bills delays the problem until the refinancing, or until next month when Greece will need more cash to carry on. The Euro area is playing it fairly tough, but is acting as the ultimate banker of the Greek state in its current strait jacket.
We normally read that the Greek government has no wish to leave the Euro, as the Greek electors claim to still support Greek membership despite the resulting policies which they hate. More recently there have been some comments to the effect that Greece might like time out from the Euro, to cut her exchange rate and write off some debts, before asking for readmission on better terms with less debt. This may just be others flying kites. However, it is still difficult to see how Greece and the Euro area can come to a long term financing agreement which suits both sides. The fact that so far there has been no sign of a decent draft agreement tells us just how far apart the two sides remain.
The Euro area does want privatisation sale proceeds, a lower spending budget and labour market reforms. Syriza is relaxed about promising higher taxes and less tax avoidance and evasion, but reluctant to do much on spending, asset sales or economic reforms. Debt relief by offering lower interest rates, cancelled or postponed interest charges, and delayed repayments now will have to hit the other member states of the Euro area and the IMF, as the private creditors took their losses last time round. It all makes it much more difficult to agree.