EU standing by Greece despite question hanging over its future

THE EUROPEAN authorities are resigned to weeks of uncertainty in Greece after a week-long bout of political paralysis culminated in the calling of a second general election in the middle of next month.

Despite soothing words from euro group president Jean-Claude Juncker rubbishing the notion that the country could be on its way out of the euro, there is no escaping the fact that this is well and truly in the frame right now.

“We are coming to the end of the road here,” said Anders Borg, finance minister of non-euro Sweden.

“Either the Greeks will decide to do the responsible thing and continue and fulfil the agreements or they must obviously seriously consider whether they can be members of the euro zone.”

Mr Borg’s remarks found many echoes in two days of talks between finance ministers in Brussels. In defiance of Mr Juncker, Dutch minister Jan Kees de Jager said his government had studied a Greek exit scenario.

A source briefed on the discussions said the ministers were in something of a bind as they had no Greek government to deal with. They awaited the completion of 77 political and legal measures by the end of June embracing austerity measures totalling no less than €11 billion.

Late on Monday night, Mr Juncker hinted at measures to give wriggle-room for Greece. However, he himself said there would be no substantive revision and euro zone sources said there was no appetite to yield to Greek pressure.

The position remains that the country will not get its next rescue loan if the end-of-June deadline is not met, a position which points to acute political strain in the aftermath of the election.

For good measure, EU leaders are due in Brussels on June 28th and 29th. Amid growing talk of a Greek exit from the single currency, it promises to be a heated affair.

German minister Wolfgang Schäuble declared yesterday that the election should be seen as a referendum on whether the country stays in the euro.

“If Greece – and this is the will of the great majority – wants to stay in the euro, then they have to accept the conditions,” he said.

“Otherwise it isn’t possible. No responsible candidate can hide that from the electorate.”

So far, so glum. While there was no hiding the sense of disquiet in Brussels over the situation in Greece, European officials have been at pains to demonstrate the strength of their commitment to the country.

Economics commissioner Olli Rehn called the Greek bailout a “solidarity pact” but reiterated that solidarity was a two-way street.

“The future of Greece and the welfare of its citizens lies more than ever on the shoulders of Greek politicians to respect their part of the solidarity pact,” Mr Rehn said.

At this point, Europe can do little but wait and see. Although many insist that the European “firewall” is now strong enough to withstand a Greek collapse, all accept this is an especially risky business.