Monday 23 October 2017

The questions raised by yet another act in Greek drama

A Greek national flag flutters next to a statue of ancient Greek goddess Athena, in Athens May 21, 2015. Greek Finance Minister Yanis Varoufakis has raised a fresh furore by telling a newspaper that he taped a confidential meeting of euro zone finance ministers, drawing criticism that he was undermining Greece's efforts to secure aid from lenders. REUTERS/Alkis Konstantinidis
A Greek national flag flutters next to a statue of ancient Greek goddess Athena, in Athens May 21, 2015. Greek Finance Minister Yanis Varoufakis has raised a fresh furore by telling a newspaper that he taped a confidential meeting of euro zone finance ministers, drawing criticism that he was undermining Greece's efforts to secure aid from lenders. REUTERS/Alkis Konstantinidis

Q: I see Greece has been raiding the piggy bank for cash. That can't be good?

A: There's no fooling you. It certainly isn't good. Greece was granted a four-month extension to its current bailout programme at the end of February, in exchange for structural reforms.

Three months later and little if any progress has been made and Greece is scrambling to try to get €7.2bn in aid released before the programme expires at the end of June. The problem is, the IMF is due a series of payments next month, and Greece has warned it won't be able to cough up unless a deal is found.

Q: But we've been here before. Since the start of the year it seems like every week brings a new Greek crisis. Surely a deal will be found and Athens won't default?

A: You'd like to think not. On two occasions within days the Greeks have raised the spectre of default, but that could be as much a negotiating position as a genuine plea for help.

There's no doubting the situation is dire. An IMF payment due last month was made after Greece raided emergency reserves. Athens has also commandeered the cash reserves of local authorities. The first of next month's IMF payments is due next week, so the clock is ticking. Athens is officially saying it will honour its debts, and it has been speculated that it can make the payment, but it is calling on creditors to compromise.

Q: What are the sticking points?

A: They centre mostly on pension and labour issues and primary surplus targets. Greece's Syriza Party-led government is under pressure at home from both voters, and hard left elements within the party itself, not to compromise take on more austerity.

Q: What effect is all this having and what will ultimately happen?

A: Although the euro weakened yesterday and stocks fell, the markets are relatively calm. It's groundhog day a little bit, and analysts seem to feel a deal will be cobbled together to prevent default, and the possibility of a Greek exit from the Eurozone.

Left-leaning campaigners, including the Greek Solidarity Committee here in Ireland, made up of various trade-union representatives, believe flexibility is needed from Greek creditors as Athens has done all it can. The latter would no doubt agree. Will Brussels? Don't count on it.

Irish Independent

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