Another chapter of the saga in the Greece debt crisis unfolded over the weekend when talks between the country and creditors fell apart. Now it’s crunch time for a deal, if one can happen.
The Wall Street Journal story by Gabriele Steinhauser had these details about the weekend’s developments:
Talks between Greece and its European creditors collapsed over the weekend, setting up a high-stakes showdown in which the country’s prime minister is gambling he can wrest a softer bailout deal directly from eurozone leaders.
The swiftness with which European officials dismissed the Greek government’s latest proposals on Sunday—calling them “vague and repetitive”—suggests Prime Minister Alexis Tsipras is placing all of his bets on appealing for better terms to German Chancellor Angela Merkel and the 17 other eurozone leaders at a Brussels summit on June 25. If he fails, a default on the country’s debt and a possible exit from the currency bloc loom.
Ahead of the summit and a big debt payment due on June 30, Mr. Tsipras also risks triggering a run on banks by panicked depositors and being forced to restrict withdrawals and transfers of euros within and out of Greece. That could quickly create a situation beyond Mr. Tsipras’s and the government’s control, officials from the country’s creditors fear.
After a flurry of meetings aimed at mending Greece’s moribund €245 billion ($275 billion) international bailout, the European Commission, which has been leading the negotiations, sent out a brief statement Sunday, saying the gap between the two sides over what spending cuts and other concessions Greece would have to make was still as high as €2 billion of budget revenues annually.
“There remains a significant gap between the plans of the Greek authorities and the [creditors’] requirements,” it said.
Peter Spiegel and Kerin Hope wrote for the Financial Times that this could be the last chance Greece has to secure a deal:
That eurogroup meeting is seen by many officials as the last chance for Athens to secure a deal on an agreed list of the economic reforms its creditors are demanding in order to release the €7.2bn aid tranche before Greece’s EU bailout runs out at the end of the month.
Asked as he exited the commission headquarters whether the break-off in talks was a bad sign, Mr Pappas told the Financial Times: “We will see.”
Without the endorsement of Greece’s trio of bailout monitors — the commission, the International Monetary Fund and the European Central Bank — the prospects of an amicable agreement on Thursday is remote, raising the prospect eurozone negotiators may resort to the “take it or leave it” strategy used on Cyprus at a eurogroup meeting two years ago.
On that occasion, an ECB representative warned that without a deal, the central bank would be forced to cut all emergency funding to Cypriot banks — essentially laying waste the country’s financial system. There have been similar pressures on the ECB in the past week to take the same stance with Athens.
Bloomberg’s Maria Petrakis reported that citizens were getting frustrated with the lack of resolution:
Framed by newspapers headlining Greece’s latest bailout-talks failure, an Athens newsstand seller says all he hears from customers these days is dissatisfaction with the government of Prime Minister Alexis Tsipras.
“Things are terrible,” says Dimitris, 23, who asked that his last name not be published. “No one knows what’s going to happen. He said one thing. Now he’s doing another.”
Greeks are increasingly weary of the roundabout of talks with creditors that’s left companies short of cash, forced savers to hoard money under mattresses and has tipped the economy back into recession. Last week, a poll showed a majority of the 1,000 Greeks surveyed were unhappy with the government’s tactics, with 77 percent urging Tsipras to seal a deal with creditors.
On Sunday, last-ditch talks in Brussels between Greece and its creditors were called off without a deal on reforms Tsipras has to deliver to get as much as 7.2 billion euros ($8.2 billion) from the country’s existing bailout funds. Germany gave its most explicit warning yet that Greece could eventually leave the euro with Economy Minister and Vice-Chancellor Sigmar Gabriel writing in a Bild newspaper column to be published on Monday that “the shadow of a Greek exit from the euro zone is becoming increasingly perceptible.”
The Washington Post story by Jan Strupczewski and Renee Maltezou said the talks only lasted an hour and that Athens was to blame for not offering any concessions:
Greece said it was still ready to talk but that E.U. and IMF officials had said they were not authorized to negotiate further. Athens insists it will never give in to demands for more pension and wage cuts.
Athens faces immediate problems in repaying its debts because the E.U. and IMF have not paid any money from Greece’s bailout programs since the middle of last year. On top of the IMF loan, Athens must repay 6.7 billion euros when Greek bonds held by the European Central Bank fall due in July and August.
Even if this short-term hurdle can be overcome, Greece still faces the daunting prospect of eventually repaying the bailout loans — something that will hang over its enfeebled economy for decades unless a relief deal is achieved.
Both sides acknowledged that the talks had lasted less than an hour, although even here accounts differed: Greece put the duration at 45 minutes, E.U. officials at half an hour.
It’s a shockingly short time frame to have talks collapse, particularly when so much hinges on finding a deal. Many people are struggling to understand why Greece and its creditors can’t come to terms with a payment plan. Much of the world has been watching to see if a deal can come together. The consequences of it falling apart could be dire.
