So, it looks like Greece got nothing.
On Thursday, Greece submitted its latest bailout proposal to its European creditors, and it looks an awful lot like what they rejected back on June 26 when Greek prime minister Alexis Tsipras called a surprise referendum on the issue.
This decision led to last Sunday’s referendum that saw Greece overwhelmingly vote “No,” meaning that the people of Greece wanted a new plan and a new path for Greece.
But now it looks like that was all for nothing.
Greece’s proposed plan still seeks an increase in corporate taxes — to 28% from 26% — which was previously offered. This plan also has Greece running a planned budget surplus of 1% in 2015, 2% in 2016, 3% in 2017, and 3.5% in 2018. Greece n is also seeking 53.5 billion euros, or about $US59 billion, in additional bailout funding, according to the AP.
Also notable, as Peter Spiegel at The Financial Times pointed out, is that none of what Greece submitted hints at seeking debt relief.
Earlier this week, Business Insider’s Lianna Brinded outlined why after just 2 days, Greece’s referendum was looking doomed, or at least a bit misguided. The big factor weighing on Greece right now is the lack of any banking activity at all.
Capital controls and bank closures, which have now been in place for nearly 2 weeks, have weighed severely on the Greek economy, which has seen activity all but seize up since the June 26 announcement that Greece would hold a referendum.
And so now, 4 days after the vote and 13 days after the referendum was first announced, it doesn’t look like Greece hasn’t really gained anything. In fact, things have probably gotten worse.
And while giving the European creditors what they previously wanted might seem like a sure-fire deal, Reuters editor Hugo Dixon, who has written a book about the future of the EU, gave a great outline on Twitter of some of the problems Greece is now looking at.
Dixon said that a flaw in Greece’s proposal is that while it may be offering materially the same concessions as the proposal from 2 weeks ago, the Greek economy has now deteriorated severely. And because of this, any concessions Greece is offering may need to be even more severe because they are starting from a more disadvantaged position.
As Dixon said on Twitter, Tsipras, “is prostrating himself before the creditors with this offer & asking for mercy.”
So basically, Tsipras better hope the European creditors don’t notice how bad things have gotten in Greece over the last few weeks, because while this offer seems like what was previously on the table, it’s actually worse.
On Saturday, the Eurogroup, a collection of 19 euro zone finance ministers, is expected to meet to discuss the plan, while a meeting of all 28 European Union nations is scheduled for Sunday.
Before this proposals are to be discussed, Greek parliament must sign off on them. The Wall Street Journal, citing a Greek government official, reports that Friday’s vote “aims to show the government’s political will to move ahead with the economic overhauls needed.”
In short, Greece needs to show a good face at home before they can go to Brussels and ask for anything from the rest of Europe.
But as Eleni Varvitsiotis, EU correspondent for Greek newspaper Kathimerini, noted on Twitter, this proposal is designed to get approval by the Eurogroup to begin, not end, negotiations.
On Thursday night, US stock futures were rallying as the market saw this proposal as something that will definitely lead to a deal.
But there is a long way to go between now and Sunday, or between now and a deal.