Everybody loves a good drama or tragedy, but it very rarely evolves into a comedy like the Greek situation seems to be unfolding. On June 18th, there’s another meeting of the Eurogroup, the last one before Greece has to make a 1.5B EUR payment to the IMF. As we explained in a previous article [10], a solution would have had to be reached before the start of the Eurogroup meeting, as every deal would have to be ratified by the parliaments of the member states.
Even though Tsipras ‘had a plan’ last weekend and seemed to be willing to make sacrifices – especially as the most recent polls indicated a small majority of the Greek population was agreeing with the requests made by the IMF, ECB and European Union, but he seems to be pulling the plug once again.
Despite a move by the ECB to charm the Greeks – the ECB said that if Greece would accept the proposed bailout package it would make more money available and it would start to purchase Greek government bonds – both parties seem to be further away from each other than ever before in this crisis. Tsipras already said he wouldn’t hesitate to reject the final deal offered by the Eurogroup and now even the central bank in Athens has released a remarkable statement.
[11]
It says that it’s unthinkable Greece will stay in the European Union [12] if no new agreement can be reached. That’s an obvious conclusion, but it’s surprising to see an official institution of Greece openly talk about a Grexit.
Athens can now see the bottom of its treasury as for instance the tax collection turns out to be 1.7B EUR lower than anticipated as the economy is turning sour (well, even more sour than before would be a better description here). The problem goes even further than that. Back in the fall of last year, DEI, Greece’s largest provider of electricity, said it had 1.7B EUR of bills [13]that were due.
Right now, that amount has increased to 2B EUR, signalling the economy is doing much worse than anticipated. This could already be seen in the increase in the unemployment rate which now stands at in excess of 26% again.
Even Dijsselbloem, the president of the Eurogroup, has lost hope and thinks an agreement is ‘highly unlikely’, and if indeed no solution will be agreed upon, the European Union and the Eurozone will enter uncharted territory. If Greece goes, who will be next? Why would Spain or Italy accept to be controlled by the European Union if it’s much easier to just abandon the block and re-gain their financial sovereignty which is now in the hands of the European Central Bank.
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