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  • Editorial: Dangers from the Italian political complication

    We may reach the end of 2018 with the Italian problem still in full swing. That means that the government must adopt measures to counter-balance the dangers that the Italian political complication appears to be creating.

    ΤοΒΗΜΑ Team
    Editorial: Dangers from the Italian political complication | tovima.gr

    If we are to believe the government, then most things are progressing smoothly, according to plan.

    The technical agreement with the lending “institutions” was reached last Saturday. The Eurogroup Working Group is expected to approve it this afternoon, and the Eurogroup is expected to confirm that on Thursday.

    After that, those in charge of economic policy must prepare a parliamentary vote on a draft law that implements all the conditions, so that on 21 June the agreement with partners and creditors on the completion of the programme can be sealed irrevocably.

    The aim in the interim – and until 20 August when the programme and the loan contract will have formally expired – is to advance debt relief negotiations and secure an arrangement that will allow Greece’s transition to another phase.
    That is the government’s aim, and the ideal scenario for the country.

    Yet, despite the rampant optimism, there are factors beyond Athens’ control. The international environment suddenly seems to darkening, earlier than Mr. Tsipras thought.

    Already, the Italian populist storm of the Northern League and the Five Star movement in neighbouring Italy is causing turbulence throughout Europe, which has increased the risk of Greek bonds.

    The yield on Greek ten-year bonds, according to the government’s planning, was to have receded to 3.5 percent after completion of the technical agreement, allowing better and more secure access to the markets.

    Yesterday, after the new Italian government was announced, the yield rose to 4.5 percent, a fact that casts doubt on the efforts to ensure secure access to the markets. Due to the fact that Italian political experimentation will drag on, conditions in international markets will not improve over the next six or seven months.

    We may reach the end of 2018 with the Italian problem still in full swing. That means that the government must adopt measures to counter-balance the dangers that the Italian political complication appears to be creating.

    That mandates greater discipline and focus on economic reform, and requires smoother political conditions domestically.

    In view of those unfavourable prospects, the government must shift its stance domestically, and pursue the understanding and consensus of the country’s main political forces.

    That obviously cannot be accomplished with battle cries and constant charges against opposition parties.

    The situation mandates a different stance, Mr. Tsipras. If you truly believe in completing the process of exiting the crisis, you, first of all, have a duty to change, before it is too late.

    International
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    Helios Kiosk