European leaders must be getting tired of all these late-night, emergency meetings with Greek ministers. After months of hearing and rejecting proposals from the likes of PM Alexis Tsipras and finance chief Yanis Varoufakis, the creditor powers are fast approaching the end of their patience.
Tsipras met with them this morning after talks broke down again last night. The two sides need to agree on a fiscal reform package in order to release €7.2bn (£5.1bn) of bailout funds from one set of creditors (the other Eurozone countries) so that Greece can pay off some of its debt to another creditor (the IMF).
The deadline for that €1.6bn (£1.1bn) repayment is Tuesday, and so far no deal has been reached. If one isn’t reached soon – and any agreement will need time to do the rounds in various parliaments – Greece will have no choice but to default, making an exit from the Euro all but inevitable.
The proposals rejected by the ‘institutions’ (creditor powers formerly known as the ‘troika’) yesterday contained the biggest concessions from Greece so far, by far.
Tsipras proposed reducing spending by €7.9bn (£5.6bn) over the next two years, in so doing meeting primary budget surplus targets of 1% for this year, rising to 3.5% by 2018. Greece even threw in a promise to ‘accelerate’ the privatisation of the Piraeus and Thessaloniki ports.
These were all once red lines Syriza said it would not cross, but that’s still not enough for the creditors. ‘I get the impression we haven’t come much further than we were on Monday,’ said Germany’s hawkish finance minister Wolfgang Schauble. ‘The preparations that were made do not make one optimistic that we will find a solution today.’
This is perhaps because the only solution the troika appears willing to accept is unconditional surrender. In fact, since agreeing to extend Greece’s bailout in February, the only concession the troika has given is to stop using the word troika.
It prompted Tsipras to tweet this last night:
The repeated rejection of equivalent measures by certain institutions never occurred before-neither in Ireland nor Portugal. #Greece (1/2)— Alexis Tsipras (@tsipras_eu) June 24, 2015
This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed. #Greece (2/2)— Alexis Tsipras (@tsipras_eu) June 24, 2015
The issue the troika has with Greece’s latest offering is about how it intends to reach its surplus targets. Syriza’s proposes to raise taxes on the wealthy rather than cutting spending on public sector wages and pensions, which left the IMF’s Christine Lagarde unimpressed.
‘You can't build a programme just on the promise of improved tax collection, as we have heard for the past five years with very little result,’ she said.
If this is a high stakes game of chicken, it looks increasingly certain that the troika simply won’t swerve. And that means Greece’s leaders have a very uncomfortable choice to make over the next couple of days: abandon the promises they made to their people, or jump into the dark unknown of life after the Euro.