It is high time for an update on the never-ending Greek story. What has changed since the last time we covered this issue? How may the Greece’s problems affect the gold market?
April 8-9 are two crucial days for Greece. Today, creditors will review the list of proposals sent by the Greek finance ministry. Tomorrow, Athens has a 448-million-euro payment due to the International Monetary Fund. At the same time, the Greek Prime Minister Alexis Tsipras is going to meet Russian President Vladimir Putin, perhaps in order to ask for financial assistance. To make the drama more interesting, the Greek deputy finance minister said on Monday that Germany owed Greece nearly €279 billion in reparations for the Nazi occupation of the country.
It is true that the preliminary list of proposed economic reforms was backed by the creditors, however Greece was obliged to present a more detailed list of planned reforms in order to access the latest €7.2 billion tranche of the four-month extended aid. The current list is far from satisfactory, as some measures are against earlier agreed objectives, while others measures lack detailed estimation of how much they would cost.
The Greek behavior may surprise, as Athens will be out of cash on April 9, after the payment to the IMF, according to Reuters. We have to remember, however, that Syriza has to play hard with creditors in order to please its voters, opposing Troika and austerity. Demand for WWII reparations fits into this scheme. We are not able to explain this in an alternative way (except branding it ‘stupidity’, as the German economy minister did), since Berlin already paid 115 million Deutschmarks to Athens in 1960 in compensation with the agreement that there would be no more claims. The issue of reparations was settled definitely by the international treaties that cleared the way for German reunification in 1990.
Tsipras’ meeting with Putin may be also a part of the drama and a signal in negotiations with the European creditors. There is a lot of speculation on this meeting, some rumors about a secret loan from Moscow, a gas discount from Gazprom, or a lift of sanctions on Greece. We do not prejudge anything, however we believe that it is very unlikely that there would be any (immediate) financial outcome. As we pointed out in the February Market Overview, Russia is entering into recession, while the ECB is the only possible backstop for the Greek banks.
Summing up, the Greek drama is not over. Today, the European creditors will review the list of proposals sent by the Greek finance ministry and decide whether to provide Greece with the last €7.2 billion tranche of the four-month extended aid. Tomorrow, Athens has to pay €448 million to the International Monetary Fund. Greece will probably manage to pay, however April may be a bit nervous, because Greece is predicted to run out of money that month and on April 24 there is the next meeting of Eurozone finance ministers, when the new bailout program will be discussed. Therefore, the Hellas’ never-ending problems and negotiations will be supportive for the gold prices in the following days.
Thank you.
Arkadiusz Sieron
Sunshine Profits‘ Gold News Monitor and Market Overview Editor
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