Despite months of concern, countless reports regarding the nation’s unlikely possibility for making repayment, and an enormous drag on the economy of Europe, Greece has officially paid back the International Monetary Fund (IMF).
After three weeks of closed banks and capital controls, Greek banks reopened on Monday to little fanfare and much foreign scrutiny. Greek banks opened and offered all banking services to customers, although capital controls remain in place. Greeks were limited to cash withdrawals of 420 euros per week, after 60 euro per day limits in place for nearly a month.
Yesterday’s agreement between the Greek government and its creditors includes a condition that requires Greece to sell €50 billion worth of public assets and establish a fund to oversee the proceeds.
Recapitalizing banks will take half, while repaying part of Greece’s debt will take €12.5 billion and investing internally to generate growth will consume €12.5 billion.
While the privatization of inefficiently managed government assets could well serve the interests of the Greek people, it could well go very wrong.
When Alexis Tsipras walked into the meeting with the remaining 18 Eurozone leaders at the weekend, he may have had in mind, not a line from Greek antiquity, but perhaps one from the Italian middle ages. Dante Alighieri’s version of hell had a simple message at its gate: “Abandon all hope, ye who enter here.” It was a very difficult, and very long, meeting for Tsipras, but my first impression is that he managed the best he could under extremely difficult circumstances.
The likelihood of Greece leaving the Eurozone increased considerably as Germany hinted at forcing Greece to leave the Eurozone for a fixed period.
From bailout to default, then referendum and lack of a bailout, Greece and the Eurozone’s troubles continue. While Greece has been on the brink of exiting the Eurozone as numerous deadlines have passed, the country’s creditors have signalled Sunday June 12 to be the final deadline for a deal when there will be a full EU summit to discuss Greece’s proposals.
As the world waits to see the outcome of negotiations between the Greek government and its creditors, our attention draws to the fragility of money by the ATM queues in Greece. The euro project, which has long been under strain, may soon start to irrevocably crack.
We recognize that this drawn out Greek drama is reaching a climax. By most reckonings, this weekend is decisive.
We have argued that Greece will have its debt relief through either default or negotiation with the official creditors. We have argued that greater hardship is coming to Greek people.
The train to a better destination has already left the Greek station. It can no longer get there from here. What is at stake now is the kind of pain Greece prefers to bear. Is it the kind of pain and humiliation that comes from succumbing to the demands of its creditors for more austerity? Alternatively, is it the pain associated with a retching of the social fabric amid a further lurch lower in the economy and an additional rise in unemployment?
The triumph of the “no” vote in the Greek referendum was not a mandate for Grexit, but a new starting-point to talks. However, is there room for a compromise any longer?
On Sunday, some 62% of Greeks voted against and only 39% for the creditors’ June 25 proposal. It was the official end to austerity policies, which failed the Eurozone in the early 2010s. Unlike Brussels, Washington opted for very different policies – and a very different outcome.
