Creditors Tell Greece: Take It Or Leave It

The European Union and the International Monetary Fund seems ready to give up on the Greeks.

The Acropolis of Athens, Greece at sunset, April 9, 2008
The Acropolis of Athens, Greece at sunset, April 9, 2008 (Robert Wallace)

Greece’s international creditors pointedly told the country on Thursday it had no time left to seek compromises.

“We need decisions, not negotiations now,” said Donald Tusk, the president of the European Council, after meeting Greek prime minister Alexis Tsipras a day earlier.

There’s no more space for gambling, there’s no more time for gambling. The day is coming, I’m afraid, where someone says the game is over.

The International Monetary Fund, which jointly administers Greece’s €240 billion bailout with the European Union, said the same day its chief negotiators had left talks in Brussels over “major differences” with the Greek side.

An IMF spokesman said, “There has been no progress in narrowing these differences recently.”

Officials worry that if a deal isn’t struck by next week, there will not be enough time left for European parliaments to enact the legislation needed to give Greece more financial support.

Creditors want Greece to continue economic and welfare reforms in exchange for another bailout.

Greece, on the other hand, demands austerity and debt relief and has angered other European governments by reversing policy changes made in the past.

Tsipras won the election in January on promises to end austerity. Specifically, he vowed to raise the minimum wage, restore collective bargaining and cancel pension cutbacks and privatizations.

Immediately after taking office, Tsipras canceled the privatization of Greece’s largest seaport and its public power utility. His government budgeted €600 million in extra spending to finance a thirteenth month of pensions and proposed €6 billion in new taxes to pay for food stamps, rent subsidies and electricity for households that are unable to pay their bills.

Hardliners in the eurozone, like Germany, say that is just the sort of generous welfare spending that plunged Greece into debt in the first place and forced other euro states to come to its aid in 2010.

The Financial Times reports that the German government has privately signaled in recent days it is time to cut off talks with the Greeks and take a “take it or leave it” approach.

Bloomberg’s Marc Champion suggests Tsipras might be deliberately exhausting the creditors’ patience in order to avoid blame when Greece is forced to leave the eurozone.

Tsipras and his far-left Syriza party campaigned on a pledge to stop complying with the core terms of the largest bailout of a sovereign nation in history, Champion writes, without saying this would require defaulting on the debt and leaving the euro — “because most Greeks didn’t want the drachma back.”

So the party offered a proposition that could be met only if Greece’s euro area partners and the IMF capitulated: End the bailout terms but keep the bailout.

This was unrealistic and officials across Europe told the Greeks as much before and after the last election.

Tsipras’s government has not helped its case by demanding war reparations from Germany and threatening to flood Europe with immigrants — including militants who might have been fighting for the Islamic State in Iraq and Syria — or seek financial help from Russia instead.

The Balkan state is due to repay a €1.5 billion loan from the IMF before the end of the month. Another €3.5 billion in bond redemptions is due in the middle of July.

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