Men browse inside a one-euro shop in central Athens. After tapping a €7bn ($7.7bn) bridge loan to avoid defaulting on the European Central Bank this month, Greek Prime Minister Alexis Tsipras is racing to complete negotiations on a third bailout in five years before about €3.2bn more comes due to the ECB on August 20.

Bloomberg/Athens

The troika is back.
Six months after former Finance Minister Yanis Varoufakis gave them the boot, Greece’s three main official creditors are sending representatives back to Athens within days, the European Commission said yesterday.
Their acceptance draws a line under the antagonism the Syriza government displayed in the afterglow of its election victory as Prime Minister Alexis Tsipras recognises the pain required to save his country from economic calamity.
After tapping a €7bn ($7.7bn) bridge loan to avoid defaulting on the European Central Bank this month, Tsipras is racing to complete negotiations on a third bailout in five years before about €3.2bn more comes due to the ECB on August 20.
“We’re looking ahead to extraordinarily difficult negotiations,” said Ralph Brinkhaus, deputy parliamentary leader of German Chancellor Angela Merkel’s Christian Democratic-led bloc. “Further aid is therefore not automatic.”
To release the funds, Tsipras needs to get past the troika.
Under Greece’s first two rescue programs, the demands of the International Monetary Fund, the European Commission and ECB encapsulated the nation’s humiliation and became a focal point for people’s rage. The word troika — derived from the Russian for a group of three — became so loaded that the bailout enforcers were re-baptized “the institutions” in a nod to Greek sensitivities.
When Varoufakis abandoned a finance ministers’ meeting in Brussels on June 27 after he was blindsided by Tsipras’s decision to call a referendum, ECB president Mario Draghi cut the tension by joking that at least they’d be able to refer to the troika again, according to a European official who asked not to be named talking about private discussions.
The troika’s presence in the Greek capital has often been met with throngs of angry protesters lamenting years of austerity that saw the economy contract by a quarter and unemployment soar to the highest in the European Union.
A man was arrested in 2013 for throwing coins at then IMF mission chief, Poul Thomsen, as he arrived at the Greek finance ministry. Now European department chief at the fund, Thomsen requires 24-hour bodyguard protection whenever he visits Athens, on the recommendation of police.
The European team works out of a bullet-proof office with double security doors outside the center of Athens where there are no EU flags or insignia to attract attention. The former head of the commission’s team in Athens was guarded by an armed, plain-clothes policeman.
Last year, a bomb exploded outside the IMF offices.
Much has changed since January 31, when Varoufakis severed relations with the troika, declaring “we don’t plan to cooperate with that committee.” For starters, Varoufakis himself has gone, replaced with the less caustic Euclid Tsakalotos when the threat of being forced out of the euro forced Tsipras to shift course radically.
With his party divided and the financial system still hobbled, Tsipras is limping along the path to aid. Banks reopened this week, though limits on withdrawals are only being eased gradually and officials said they will extend the shutdown of the stock and bond markets into a fifth week.
The three-week bank holiday has cost the Greek economy about 3bn euros, Constantinos Michalos, head of the Athens Chamber of Commerce, said yesterday.
“Once the possibility of Greece leaving the euro, or Grexit, is openly discussed, it will be difficult for it to remain in the group,” said Peter Rosenstreich, head of market strategy at Swissquote Bank near Geneva. “With that amount of debt, Greece needs growth, but long-term investors wouldn’t want to invest in Greece because of the uncertainty.”
This week the premier won lawmakers’ endorsement for the measures the euro area demanded as a prerequisite for starting formal bailout.
The Washington-based IMF typically sends a team of economists, led by a mission chief, to assess a borrowing country’s economic health and negotiate reforms. After Syriza took power in January, the government restricted access for IMF officials to the country’s ministers, arguing that a deal should be negotiated at the political level. The move created friction between fund staff and Greek officials.
Under previous governments, IMF officials had broad access to Greek ministers and officials in the nation’s finance ministry, a freedom of movement that created friction between Greek and overseas staffers and lent the impression to the public that the outsiders had the upper hand.
At the July 12 summit that kept Greece in the euro and laid the foundations for the negotiations, the creditors insisted that Tsipras return to the old way of doing business, even as they allowed him to keep the diplomatic fig-leaf of their new name.
Greece will “fully normalise working methods with the Institutions, including the necessary work on the ground in Athens, to improve program implementation and monitoring,” according to the summit agreement Tsipras signed up to.