ATMs running dry, pharmacies running out of medicines and companies running out of money to pay their staff. Greece is more like a country struggling to recover from a devastating civil war than a member of the Eurozone. But it is still the latter – just.
Today, Eurozone leaders meet to decide the fate of the Greeks, after they voted decisively to reject the latest austerity-laden bailout package. Yes, this is yet another eleventh hour chin wag. But with Greece’s banks shuttered and dying an increasingly rapid, liquidity-starved death it really is close, if not the, last chance to stop a default and Grexit.
The last (well probably the final one this time - but you never know) hope of a deal may rest with the persuasive powers of the French, which have been making increasingly conciliatory noises about the possibility of writing off part of Greece’s 320bn debt mountain to keep it in the fold. It had been reported that Alexis Tsipras, Greece’s left wing prime minister, would ask for a 30% haircut today.
Any such demand is anathema to Germany, which holds the largest proportion of Greek debt (21%, followed by the French on 13%). Vice-chancellor Sigmar Gabriel said it was out of the question, as it would trigger similar demands from other indebted southern European nations and ‘blow up the Euro.’ Perhaps French president Francois Hollande’s Gallic ‘charm’ didn’t work on Germany chancellor Angela Merkel during their meeting yesterday.
However, there is a possibility the hard left Syriza government may not have actually moved that much from the position they encouraged their people to vote down on Sunday. German newspaper Suddeutsche Zeitung has apparently seen Tsipras’ latest proposals and says they’re not all that different from last week’s.
Even if that were true, the snap referendum destroyed most, if not all, of the trust between Greece and the rest of the Eurozone governments, making it that much harder to find common ground for a deal. Now, though, both the Greek economy and the whole Euro project are dangling by an ever-thinner thread.
It seems the fate of both rests again with Germany, and its amenability to being persuaded by the Euro doves. Many economists now argue it would be best for the Greeks if they were to exit to Euro and essentially rebuild their economy from scratch (starting with their tax base would be a good idea). But most probably hope Hollande is more popular with German leaders than he is with his own people.