As stated in yesterday´s edition, Draghi held the winning cards in forcing Tsipras to compromise over a rescue package, which enforced past pledges. Yet he surprised the markets by the swift move taken only a few hours after his meeting with Varoufakis and on the eve of a key visit to Berlin by the Greek PM.
The exceptional collateral treatment awarded to Greek sovereigns was due to finish at the end of this month unless a successful review of the rescue package was completed by that date. By cutting short the liquidity supply to the banking system, the new government is being hardly pressed to accept tough conditions in exchange for fresh money. Its defiant mood, when visiting capitals around Europe, is bound to change as it now faces economic implosion back at home.
Draghi was indeed the only one in a position to corner Tsipras. Yet, by acting before the deadline expired, he has taken a political decision departing from the neutral stance one expects from a central banker. The ECB allegation that a successful review of the package was unlikely to take place, underlines the nature of a move based on assumptions and targeted at bringing Tsipras to his knees.
The Greek government might run out of cash sooner than expected, as its ability to issue short-term bills is severely curtailed. It will have to abandon any hope of resisting a prolonged siege in the hope of breaking up the loose European coalition. It will also be at pains to sell any victory over the much despised austerity package, even if that is only snatching some limited concessions on debt scheduling.
Mr Varoufakis would be well advised to wear a grey suit and an undistinguished tie when he meets colleagues in the Eurogroup. He should enter into a more constructive discussion with Jeroen Dijssembloem than the one that took place in Athens only a few days ago.
Tsipras bet responsible leaders around Europe would never force a Greek collapse, believing such a move would backfire and harshly hit the Eurozone. But the utter weakness of his country’s financial system allows the ECB a huge upper hand in coupling support with stern conditionality. Now he faces the grim prospect of returning home laden with additional workload.