Things are getting very rough for Greece. A sign perhaps that the end – whatever that end might be – is approaching.
Yesterday, we built up inside us a bit of hope for some kind of solution, at least another kick of the can a little further down the road.
There were reports that German Chancellor Angela Merkel would make a bold, courageous move – together with French President Francois Hollande – in her meeting with Greek Prime Minister Alexis Tsipras on June 9.
Perhaps, many thought, she paid heed to the advice of President Barack Obama who was in Germany a few days ago.
Specifically, it was said that the Germans would give the remaining 7.2 billion euro dose of aid to Greece on condition that Mr. Tsipras would carry out one – only one – reform.
It was not specified, but it seems it was in the area of the “red lines” i.e., the issues of pensions, labor market deregulation, and increases in taxation. We do not know if that plan was presented during the meeting.
In any event, the Athens Stock Exchange soared June 11 with an increase of more than 8%. Something had to appeal to investors.
And suddenly, just before noon on June 10, the bomb went off: The delegation of the International Monetary Fund walked out of the negotiations in Brussels.
“There are major differences between us in most key areas, and there has been no progress in narrowing these differences, and we are well away from an agreement,” Gerry Rice, a spokesman for the IMF told reporters at a briefing.
But the Prime Minister insists a solution is close. How is it that the IMF says the opposite? In any case it is difficult to underestimate the magnitude of the importance of the withdrawal of the IMF and the message it sends.
If I read correctly between the lines of the statement, it seems to say that they are fed up with the mockery. Of course, this is what the Finance Minister, Yanis Varoufakis, was seeking for sometime now because he considers the IMF an obstacle to a solution. Nice.
But an agreement without the IMF cannot be reached now. The IMF is quite invested in the situation in Greece. It has contributed more money to Greece than to any other country.
Nor would it be a bright idea – deliberately or not – for Greece not to make its payments. So the IMF representatives will have to return to negotiations, but for that to happen they will require serious evidence of an imminent agreement.
There is another issue: America has significant influence in the IMF and it had intervened several times in favor of Greece. Does then the departure of the IMF mean a change in the position of the White House?
Not necessarily, although it is interesting that the action coincided with Obama’s visit to Germany. Or is the departure of the IMF a negotiating tactic that aims to pressure Greece into a settlement?
Maybe … and maybe not. But if I were in Tsipras’ position, I would not risk finding out the answer.