While Greece’s coalition government and its international lenders play a tug-o-war over reforms and money, businesses and people are hurting, world press reports find.
Deal or Debt: Greek Prospects Equally Depressing
As Greek prime minister Alexis Tsipras and his finance minister Yanis Varoufakis have discovered the hard way, international financial deal-making is a world away from the thrill of a barnstorming election campaign.
But with Varoufakis sidelined after a series of less-than-helpful public interventions, Tsipras and his colleagues appear to be in the final stages of agreeing a deal with the country’s eurozone creditors and the International Monetary Fund – renamed the “Brussels Group” to assuage the Greek public’s hatred of the “troika”.
Every day last week saw a fog of claims and counterclaims about how much progress was being made by officials in Brussels and their political bosses, who discussed the issue on the sidelines of the G7 summit in Dresden. But there is at last a feeling that both sides are making progress.
If Tsipras pulls off a deal and skirts default, it will be a political and personal triumph, in the face of extraordinary odds.
And if he can persuade Greek voters to back him in the messy compromises he will inevitably have to make to win over the lenders – especially the IMF, which is reportedly taking a particularly tough line – it will be close to miraculous.
As Gabriel Sterne of Oxford Economics pointed out last week, while two-thirds of the Greek public believe Syriza should be willing to compromise, almost 60% thought that should not include pension reform – likely to be a red line for creditors. Sterne believes there is now almost a 50/50 chance that the country could be forced out of the single currency.
With every day that passes, holidaymakers opt for Ibiza instead of Crete, for fear of being caught out by a Greccident.
The sad truth for the Greek people is that none of the roads ahead of them looks anything but grindingly hard. This is a country where GDP collapsed by a quarter in the aftermath of the crisis; where unemployment remains above 25%; and where average wages fell by almost 18% in real terms between 2008 and 2013.
The latest reports suggest that Angela Merkel and François Hollande will discuss the issue with European commission president Jean-Claude Juncker on Monday.
But with every day of fruitless talks that passes, bank deposits drain out of Greece as nervous savers squirrel their money abroad, investors postpone spending plans and holidaymakers opt for Ibiza instead of Crete, for fear of being caught out by a summer Greccident.
Bank deposits have hit a 10-year low, according to the latest data. And the political turmoil has strangled the tentative economic recovery that got under way last year. Separate figures released last week confirmed that Greece has slipped back into recession.
If a deal is done, the country is likely to face another bout of painful structural reforms and stringent spending cuts, to satisfy the Brussels Group that it’s not throwing good money after bad – and there appears little hope that the debt forgiveness Tsipras and Varoufakis once so stirringly advocated will be part of the package. That means Greece will still face hefty repayments, and the scrutiny of its paymasters, for years to come.
And if no deal is forthcoming by the 30 June deadline both sides appear to have set (though Athens must cobble together the money for several debt repayments before then), then Greece faces the risky and uncertain prospect of defaulting on its debts and crashing out of the euro.
Politicians Waiting for Greek Accident to Happen
The Telegraph – Szu Ping Chan
European policymakers must stop “waiting for an accident” to happen in Greece and work towards a deal with Athens to avoid the country’s exit from the eurozone, the former head of the European Commission has warned.
José Manuel Barroso, who led the EC for a decade, said that politicians had taken “too long” to find a solution, which had left Greece in danger of defaulting on its debt.
“Sometimes I get the impression that people are waiting for an accident so that they can really focus [on] avoiding a bigger disaster. It’s too long this time that has been taken to find a solution. I believe it’s important now to find that solution.”
Mr Barroso has previously warned that a Greek exit could trigger the start of disintegration of the euro. “It breaks a taboo and sets a precedent,” he said in April.
Speaking on the BBC’s Andrew Marr Show on Sunday, Mr Barroso said: “It will certainly be negative for Greece and the euro area if there is a default or if there is a Grexit. But I believe that a solution can still be found.”
Greece will remain in focus this week as the cash-strapped government scrambles to pay back €304m (£218m) due to the International Monetary Fund (IMF) on June 5.
Alexis Tsipras, Greece’s prime minister is due to hold talks with German Chancellor Angela Merkel and Francois Hollande, the French president on Sunday night as part of ongoing efforts to secure Greece’s future in the 19 nation bloc, according to the ANA news agency.
Giorgos Stathakis, minister of economy, infrastructure, shipping and tourism, said on Sunday that he expected a “technical solution” to be found with Greece’s creditors “in a few days.”
Mr Stathakis has said the country will avoid a default this week, insisting that the cash-strapped government would meet its June 5 repayment.
Greece Suffering as Debt Crisis Kills Business
The Independent – Nathalie Savaricas
The onset of warmer weather in Athens is usually accompanied by locals flooding the streets of their capital, shopping, eating and drinking out. This year, the shopfronts are empty. As insecurity surrounding Greece’s debt crisis grows, more and more small businesses are folding.
Since Syriza’s arrival in power, with its radical approach to debt negotiations, doubts have increased as to whether Athens can clinch a deal at all.
The government has remained optimistic about its ability to reach a deal with its creditors by 31 May, but with each confident statement in recent days has come a careful qualification from the European side.
On Friday, Economy Minister George Stathakis said that Greece would pay back the €304m (£219m) due to the International Monetary Fund on 5 June, as Christine Lagarde, head of the IMF, maintained that a Greek exit from the euro was still a possibility.
The world has been left wondering whether the country will manage to stay solvent and a member of the EU. And this uncertain climate has sounded the death knell for thousands of businesses that had been clinging on in the hopes of change after Syriza’s electoral triumph.
“Since the elections, the market is completely frozen – people won’t spend a dime because of the insecurity. They don’t know what to do with their money, [whether] to spend it or to hide it,” says Efi Chrisolomou, a shoe shop owner who is in the process of closing her business in the central neighbourhood of Kypseli after nearly 20 years.
New figures released on Friday showed that bank deposits had fallen to their lowest in more than a decade.
“What if there’s no deal with the EU? Greeks are very scared and we don’t deserve all this fear. We really don’t – we’re being punished,” she said.
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