Greek Deal Will Erode Sovereignty and Deepen Recession

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Dimitri Lascaris says the deal is a collective punishment of the Greek people for supporting a party that attempted to moderate neoliberalism in Europe - July 14, 2015

Bio

Dimitri Lascaris is a partner with the Canadian law firm of Siskinds, where he heads the firm's securities class actions practice. Before joining Siskinds, he practiced securities law in the New York and Paris offices of a major Wall Street law firm. Last year, he was named by Canadian Business magazine as one of the 50 most influential business people in Canada, and was described by the magazine as "the fiercest advocate for shareholder rights" in Canada. He is currently prosecuting numerous securities class actions in Canada, including the Sino-Forest class action, in which his clients just negotiated the largest auditor settlement in Canadian history: a $117 million settlement with the accounting firm Ernst & Young.

Transcript


We're going to take a closer look at the deal struck between Greek Prime Minister Tsipras and the leaders of the Eurozone. Now joining us to deconstruct it is Dimitri Lascaris. Dimitri is a securities class action lawyer in Canada and the U.S. He previously worked as a corporate securities lawyers for a major Wall Street firm in New York and Paris. He's also a board member of the Real News.

Thanks for joining us again, Dimitri.

DIMITRI LASCARIS, SECURITIES CLASS ACTIONS LAWYER IN CANADA: Thank you, Paul.

JAY: Okay, so give us the highlights of the deal and what you think of it.

LASCARIS: Well, let's look first at the context in which this deal was struck. The referendum as we all know was held on Sunday of last week. Although there were numerous polls, none of them showed the no vote winning by anything close to the margin by which it won, which was 24 points. The biggest margin shown by any poll was 10 points. Most of them showed a razor-thin victory for the yes or the no side.

The government, much to everybody's surprise after this resounding and rather courageous vote of the Greek people against the ultimatum of the Troika, submitted an offer after the surprising resignation of the ex-finance minister, Yanis Varoufakis, that was essentially worse than the ultimatum that the populace had directed them to reject. For example, it didn't raise corporate taxes as much as had been proposed. It raised the VAT to a greater degree than the government had previously been willing to raise it. None of this was deemed to be adequate. There were other concessions that were made in this post-referendum offer. None of it was deemed to be adequate by the Troika.

And essentially, an ultimatum was issued to the Greek government. It really came via the ECB. And what the ECB said was in light of the fact that the no vote has prevailed and the offer has been deemed inadequate by the creditors, we are going to cut off liquidity assistance to the banks on Monday unless, and I'm paraphrasing here, there's a strong political signal that a deal has been revived and is very much in the offing. That's what the ECB said.

Then the press began to report on Friday of last week, for example there was an extensive report on this in CNBC, that unless the ECB actually increased, not simply refrained from withdrawing but actually increased its emergency liquidity assistance to the Greek banks on Monday, they would fail. Or at least, some of them would fail.

Well, it's now past midnight on Monday. During the day the ECB announced that it was not increasing the liquidity assistance. It also announced that it was not going to withdraw it, either. And to my knowledge not a single Greek bank has failed.

But this was the context in which the negotiation occurred. There was a claim that the banking system was on the verge of failure on Monday absent the decision to raise liquidity assistance and that that would be conditioned upon there being in substance or in principle a deal.

So the Greek government is now entering these negotiations over the weekend under intense pressure. Principally because it appears to have engaged in little to no meaningful preparation for the possibility of a Grexit. And because of that and failure to strike a deal that would see further funding from the creditors would precipitate a banking collapse, and even the limited amount of money available under the capital controls would no longer be forthcoming. The banks wouldn't have any money.

So under this intense pressure, Tsipras acceded to a set of terms at least in principle which are far worse than anything Greece has had to endure thus far, and certainly worse than what was on the table when the referendum was called.

The other thing--and I want to say it before we get into the substance of that, that many of these proposals--not these proposals but these demands of the Troika to which the Tsipras government has acceded, have to be adopted according to the demand of the Troika within three days. By Wednesday of this week.

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