Greek saga at end of road as patience and options run out

Greece needs quick deal to ensure it can repay €1.5bn to IMF and avert bankruptcy

  Four months have passed since Alexis Tsipras’s hard-left Syriza movement swept to power with ardent promises of a new beginning for Greece, an end to austerity and the “humiliation” of troika oversight, and a write-down of the vast national debt. Well, it never happened. Photograph: Alkis Konstantinidis/Reuters

Four months have passed since Alexis Tsipras’s hard-left Syriza movement swept to power with ardent promises of a new beginning for Greece, an end to austerity and the “humiliation” of troika oversight, and a write-down of the vast national debt. Well, it never happened. Photograph: Alkis Konstantinidis/Reuters

 

The long and increasingly dangerous standoff between Greece and its creditors is coming to a head. With its economy at a halt after years of turmoil and deposits seeping from banks at a drastic rate, Greece needs a quick deal to ensure it can repay €1.5 billion to the International Monetary Fund in June and avert bankruptcy in July.

Time is short. Although the European Central Bank resolved two days ago to increase emergency aid to Greek banks by €200 million to €80.2 billion, Moody’s rating agency says the banks have lost more than €30 billion in deposits since December. Distress is everywhere. On top of the banks’ perilous position is a marked decline in tax payments by Greeks, a further portent of disturbance and despair. This is to say nothing of the social crisis in the country.

Four months have passed since Alexis Tsipras’s hard-left Syriza movement swept to power with ardent promises of a new beginning for Greece, an end to austerity and the “humiliation” of troika oversight, and a write-down of the vast national debt. Well, it never happened.

Amid deep uncertainty over the government’s actual stance and concern it was attempting in an unscrupulous fashion to game talks with lenders, relations with creditors worsened as steadily as the public coffers emptied. Instead of trust and co-operation, there is rancour.

Elements within the governments of Germany, Spain, Portugal and other euro zone countries are said to argue for the removal of Greece from the single currency. Indeed, public warnings of bankruptcy and debt default are so frequent at this point they hardly convey the force of jeopardy engulfing Greece. The final repositories of cash are being searched. Though no one is saying exactly when the Athens treasury will run out of money, there may be enough to get through June but no further. There is no certainty, however, that all IMF obligations can be met next month.

This must stop. If the engagements thus far have gone around in circles, the time for aimlessness and delay has passed. Not without reason, there’s been no end of criticism in Europe of the Tsipras administration and of his voluble finance minister Yanis Varoufakis. But are we really at the end of the line?

Debt forgiveness

As one wry Brussels figure puts it, some kind of a “bedraggled rabbit” might be pulled from a hat eventually. But what? Give and take is required from all sides. Criticised for not articulating exactly what his net position is, Tsipras must do so quickly. He has conceded on crucial red lines vis-à-vis debt writedowns and external supervision, but if there are other lines he really can’t transgress he should make that clear.

As I understand it, there are two points of particular sensitivity: further cuts in pension payments; and new measures which would allow big employers to eliminate large numbers of jobs without ministerial approval. If Tsipras simply can’t do these things after conceding on other fronts, he shouldn’t be forced to. Still, he might have to provide alternatives.

Yet serious difficulties remain. At issue immediately is the release of the final tranche of loans under the second Greek bailout. But Greece seems so far off track right now that yet another loan package will be needed. Any such move, in turn, presents the prospect of parliamentary votes in countries in which politicians already have grave doubt over the viability of Greece’s membership of the euro and over its capacity to repay loans granted.

There is little prospect of a settlement before EU leaders gather in Brussels for a summit on June 25th. An arrangement may be then made avert disaster in July but no one would go so far as to say a durable solution is in play. That there is contingency planning going on for a “Grexit” does not seem to be in doubt. But is that the best solution? At the humanitarian level or viewed from the perspective of economics, financial markets, politics or geopolitics, a departure from the euro would bring only further trouble.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.