The sad saga of unending, even impossible demands by the Troika on Greece continues. For example, please consider this set of paragraphs listed in a Eurogroup Statement of conditions placed on Greece.

The Eurogroup also welcomes Greece’s intention to put in place a mechanism that allows better tracing and monitoring of the official borrowing and internally-generated funds destined to service Greece’s debt by, under monitoring of the troika, paying an amount corresponding to the coming quarter’s debt service directly to a segregated account of Greece’s paying agent.

Finally, the Eurogroup in this context welcomes the intention of the Greek authorities to introduce over the next two months in the Greek legal framework a provision ensuring that priority is granted to debt servicing payments. This provision will be introduced in the Greek constitution as soon as possible. ….

We reiterate our commitment to provide adequate support to Greece during the life of the programme and beyond until it has regained market access, provided that Greece fully complies with the requirements and objectives of the adjustment programme.

Lovely, isn’t it? The Troika now wants Greece to pass constitutional amendments to meet its demands to bail out Greece French and German bondholders, the IMF, and the ECB.

How likely is that? The answer is “not very” given it cannot be done constitutionally until 2013 at the earliest according to Keep Talking Greece.

Please consider Greece Needs New Parliament to Pass Constitutional Provision Imposed by the Troika

Conditions for Constitutional Amendment

According to Greek constitution, an amendment of the constitution can take place after two consecutive legislation terms and not before five years have past from the latest amendment. As the Greek parliament passed an amendment in May 27, 2008, a new amendment before 2013 is hardly achievable.


  • 50 MPs have to propose the need for a Constitutional Amendment. The amendment proposal has to be approved at two parliament votings, which will take place in one month form each other. The approval needs ‘enhanced majority’ i.e. 3/5 of the MPs or 180 MPs have to vote in favor, although some provisions can pass with the ‘absolute majority’ of 151 votes in the parliament fo 300. With the parliament voting, the provisions to be amended will be determined.
  • The proposal for a constitutional amendments can be voted by the current parliament, but a new parliament that will come into force after elections is needed to pass the amendment.
  • The new parliament can pass the amendment during its first session after the elections. An enhanced majority of 3/5 is needed for the amendment to pass, that is: 180 votes in favor.
  • No new amendment is allowed before five years have passed after the latest one.

The current Parliament could pass the amendment proposal within 1 to 1.5 month as Papademos coalition government partners have an enhanced majority of at least 184 votes (PASOK 130 seats, ND 64 seats). Should the elections take place towards end of April or beginning of May, the new parliament will have to wait for almost a year to pass the Eurogroup imposed provision. However as the Greek voters are angry at the two big parties that ruled the country for almost four decades, who can say in advance what will the political balances in the new parliament?

Only Way to Win is to Lose

Technically, 2013 is “as soon as possible” but I highly doubt that is what the Troika meant.

As I said in 9 Day Race to Ecstasy; Only Way Greece Can Win Is To Lose:

Hold your horses on that “finalized” deal. There are still numerous austerity measures to implement, details to wrap up, ribbons to cut, and bows to tie. …

Things have deteriorated so badly, the deal is in no one’s best interest.

Germany clearly understands that simple fact and has put up roadblock after roadblock hoping to find the right set of conditions that Greece would not accept or fail to meet if they did accept them.

At this point, no statements by Greek politicians or the Troika are credible. Rather, I suggest statements are made by everyone to prevent further capital flight. If Greece was working on a plan to return to the Drachma they could not say so.

Likewise, if Germany was attempting to force Greece to return to the Drachma, Germany too would have to deny it. And Chancellor Merkel has, as noted in Merkel’s Official Denial “I will have no part in forcing Greece out of the euro”; Schäuble Starts Salami Tactics on German Participation, Calls for Vote

The perpetual placement of roadblocks suggests that Greece will not survive the Ides of March. If by some miracle Greece does make the March 20 payment, I still stick with Disastrous Piecemeal Breakup of Eurozone Likely in the Cards because nothing has been solved.

The deal is in no one’s best interest and cannot last.

Mike “Mish” Shedlock
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