Printed edition. The intermittently cinematic circumstances under which the bond swap deal was finally reached PSI at the end of 2011 describes the former head of the International Bankers Association – IIF, Charles Dallarawith the book “Euroshock – How the largest debt restructuring in history helped save Greece and preserve the Eurozone”.
“The Prime Minister Papandreousensing the extreme discomfort of Eurozone governments with his possible involvement IMF, suggested in early 2010, as a tactical move, that Greece would seek help from the IMF if the Commission did not soften its demands – despite having publicly ruled out such an option in previous months. Finally, the chancellor Merkel accepted his offer, and the troika was born!” mentions features in his disgust. Among the protagonists of the PSI, Mr. Dallara early on grasps the thread of the dramatic developments that led to the ten-year adventure of the Greek economy, stressing that “Greece clearly needed to rein in its unsustainable fiscal deficit, which had ballooned dramatically in 15 .4% of GDP towards the end of the Karamanlis administration in 2008 and 2009”.
But he also stands by the first critical actions of the new government at the time: “When Prime Minister Papandreou mentioned the dubious goal – of increasing revenue as a percentage of GDP from 39.3% in 2009 to 45.7% in 2013 – to me and Bill Rhodes in Davos at the end of January 2010 we were struck by the idea that this was a practical path to restoring stability. But we didn’t react. Maybe we should have done it.”
His descriptions of his show are brilliant Nicolas Sarkozy, in the meeting room in October 2011 in Brussels: “”If you don’t accept our position, in 4 hours when markets open in Asia,” and he looked dramatically at his watch, “I will destroy you and the banks you represent and I will bury you all in the press”. Silence fell in the room. He was, as one later described his performance at the G7 Summit in Cannes, “the complete Sarkozy”.
What the former head of the International Banking Association, Charles Dallara, reveals in his book on the restructuring of the Greek debt.
Then he did something that left me even more embarrassed. He gave us a look that seemed to say, “Don’t take it personally, Mr. Lemierre and Dallara.” A glint appeared in his eyes, and the beginning of a smile, and I believe what followed was a wink. Suddenly, everything became clear to me. He did it for Merkel and everyone else in the audience, letting them know he could take the reins and beat the bankers with nerve and gusto.”
Mr. Dallara invokes the then president of France in another snapshot of the Greek debt restructuring negotiations: “We politicians are not much loved, but you bankers,” and he practically spat the words, “you are absolutely hated. And now look at yourself. You are making terrible, shameful, outrageous demands on Europe and the long-suffering Greek people.” The words of the then Chancellor of Germany, Angela Merkel, appear clearly more measured.
“He stated that it was necessary to reach an agreement on the Greek debt. He reminded us that the Eurozone had already pledged 100 billion euros and the IMF another 20 billion euros, and that now it was the turn of the banks to sacrifice,” recalls Charles Dallara. Regarding the balance that prevailed at that time inside Greece, he characteristically mentions: “Increasing the sense of disorder, Prime Minister Papandreou dismissed the Minister of Finance, George Papakonstantinouon June 17 and replaced him with Evangelo Venizelos.
Papakonstantinou was an extremely capable economist, who showed real focus and commitment to work. Unfortunately, he was no match for the phalanx of Greek political forces, determined to see reform efforts falter. (…) But Venizelos the finance minister? (…) He had certainly demonstrated his intelligence and talent in a number of difficult positions. (…) Five months later, Papandreou would learn that bringing a rival into the cabinet posed risks to his own political future.”
Over 100 bankers
“Trying to convince over 100 bankers to write off losses was obviously not an easy thing,” commented the president of the Hellenic Bankers’ Association Gikas Hardouvelis, at an EET event for the presentation of the book attended by Mr. Dallara. As for the author himself? “Bank losses would be painful. But they are not comparable to the losses they would have if Greece were to leave the Eurozone.”
2024-04-16 08:30:36