Greece’s economy is essentially broke, its government clueless about what to do and rescue talks stalled, so what happens now, world press reports ask.
Greece: A Financial Zombie State
The New York Times
Greece and the other countries in the eurozone are once again at an impasse days ahead of a crucial deadline. If the two sides do not reach an agreement on how to extend a 240 billion euro ($270 billion) loan program beyond June 30, Greece will most likely default on its debts and would probably be forced to abandon the euro.
European leaders have been in a similar situation before and have managed to strike a deal to avoid default and Greek exit from the euro.
But those agreements have only put off the moment of reckoning without resolving Greece’s fundamental economic and financial problems.
To break the cycle, European officials need to produce a realistic plan to revive the devastated Greek economy and put the government’s shaky finances in order.
Here is what such a plan would look like: The 18 other members of the eurozone would agree to forgive or delay the repayment of some of Greece’s crushing debt, which is equal to 177 percent of gross domestic product.
In exchange, the government of Prime Minister Alexis Tsipras must agree to changes that would increase tax collection, make the government more efficient and to boost economic growth by making it easier to start new businesses.
For any arrangement to work, the leaders of Germany and other eurozone nations have to be willing to lose some of the money they put up to repay Greece’s private lenders, many of whom were banks and investment firms in their own countries …
Whether Greece will have to go on in this zombie financial condition will also depend on the International Monetary Fund and the European Central Bank, both of which have lent money to Greece. I.M.F. officials have been privately pressing the eurozone for debt relief for Greece, but the fund’s managing director, Christine Lagarde, should do more to convince European leaders that the country cannot succeed unless there are major changes to the loan program.
Greece Talks: Time to Strike a Deal
The Irish Times
It looks like negotiations between Greece and its creditors, after months of talking, are finally coming to a crunch. An agreement is needed next week, we are told, if money is to be made available to allow Greece to meet a €1.5 billion repayment to the IMF at the end of June.
The other EU governments are warning that time is nearly up and the IMF has returned its lead negotiator to Washington, saying no progress had been made in recent weeks.
Deadlines have come and gone and there can be no certainty that the latest one may not slip a bit, too. However if the final instalment of Greece’s bail-out is to be released on schedule to make the IMF payment, then time needs to be left for some national parliaments to approve this.
A further payment of €3.5 billion to Greece’s private sector creditors is due in mid-July. One way or another, time is now short.
There is much to criticise in the previous bailout agreements, particularly the failure to take a realistic approach to Greece’s debts when the latest €172 billion deal was put in place. Some of the current difficulties could have been avoided if a more realistic plan had been agreed at that time.
Greece’s high debt level obliges it to run a surplus on the rest of its budget, in order to be able to service its debts, and thus cutbacks and higher taxes have been imposed.
A lot of time has been lost in the talks between Greece and its creditors already.The tactics of the Syriza-led government have angered its creditors, who feel that it is not showing enough determination to implement the necessary economic reforms.
All sides must realise by now that some restructuring of Greece’s debts to official creditors will, at some stage, have to happen.
However this is only likely to come on the table if Greece puts forward a credible reform plan. And so far it hasn’t, rejecting the plans put forward by its creditors, but not yet coming up with detailed alternatives.
Greece Running Out of time to Avoid Default
The Guardian – Ian Traynor
Greece has less than a week to strike a deal with its eurozone creditors to avoid defaulting on its massive debts and perhaps being kicked out of the single currency area, with German leaders and top European Union officials now conceding that default is the likeliest outcome.
Negotiations between the leftist government in Athens and its creditors are now at their lowest ebb since Alexis Tsipras became Greek prime minister in January.
Angela Merkel, the German chancellor, and Jean-Claude Juncker, the president of the European commission, said on Friday that talks with Greece would carry on ahead of next Thursday’s key meeting of eurozone finance ministers in Luxembourg. That meeting is now viewed as the deadline for a decision on Greece’s fate.
Merkel was said to have resigned herself to a Greek default, and at a meeting on Thursday night in Bratislava, eurocrats preparing for the Luxembourg talks included the default scenario in their discussions for the first time.
Until Friday EU executives have refused to countenance the prospect of default and the issue has not been discussed at any official level.
According to German media reports on Friday, Berlin has also begun contingency planning for Greek default scenarios.
The plans were said to include the introduction of capital controls in Greece, closure of the banks, and the government’s issuing of IOUs to finance its public sector.
There is no exit plan for any country to leave the euro, but economists have suggested that such IOUs could then become a pseudo-currency, but they would circulate only within Greece. They would be impossible to use for international trade.
“The chancellor now knows that there is not enough time left,” one of Merkel’s aides told German mass-circulation newspaper Bild-Zeitung.
Jeroen Dijsselbloem, the Dutch finance minister who will chair next week’s Luxembourg meeting, delivered an ultimatum to Athens, warning it would be left “alone” if it did not meet the creditors’ terms for securing remaining bailout funds.
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