Greece Forces More Delay in Bailout Crisis Resolution

Greece fails to submit reforms in time, pushing back a resolution of its bailout crisis once again.

Greek prime minister Alexis Tsipras speaks with German chancellor Angela Merkel in Berlin, March 24
Greek prime minister Alexis Tsipras speaks with German chancellor Angela Merkel in Berlin, March 24 (Bundesregierung)

Greece forced another delay on Monday in its standoff with the rest of the European Union and the International Monetary Fund when it failed to submit revised reform proposals in time.

“We all came here for a meeting that really has no chance at an agreement because the documents weren’t ready,” Austria’s finance minister, Hans Jörg Schelling, complained. “This could have really been done more professionally.”

Greece sent in one proposal Sunday night and then another Monday morning, leaving officials without enough time to study them in detail.

Schelling’s powerful German counterpart, Wolfgang Schäuble, lamented, “The situation for me is the same as on last Thursday.”

A meeting of eurozone finance ministers broke up at the time when Greece continued to insist on relief from the austerity measures to which its financial aid is tied.

The failure of Thursday’s summit prompted European Council president Donald Tusk to call an emergency session of Europe’s leaders which convened later on Monday.

Greece needs the final €7.2 billion tranche of its €240 billion bailout to pay off a €1.5 billion loan from the IMF by the end of the month. Another €3.5 billion in bond redemptions is due in the middle of July. Without help from the European Union, it is extremely doubtful the country could find the money to make good on its commitments.

Aggravating the crisis is the precarious state of Greece’s financial sector. Fearing default and a possible Greek exit from the eurozone, savers have reportedly withdrawn up to €6 billion from their accounts in the last week. Usually, only between €200 and €300 million is taken out of Greek banks on a given day.

The European Central Bank provides emergency funding to Greece’s banks. But if no agreement is reached on the future of its bailout this week, the bank may be hard-pressed to justify continuing support while eurozone parliaments could be unable to return from summer recess in time to debate and approve a deal.

At the last minute, the radical government that came to power in Athens in January seemed willing to compromise. Among the proposals it made early on Monday were a raise in the retirement age to 67 and a sales tax increase to 23 percent.

The concessions came after weeks of deadlock during which Greece repeatedly bungled its interactions with other European Union member states — to the exasperation of its creditors. It submitted economic policy proposals to Brussels that had already been rejected and leaked details of ministerial meetings that are normally kept secret.

Elected on a vow to end austerity, Prime Minister Alexis Tsipras lambasted other European states for making “absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

Immediately after taking office, Tsipras reneged on the terms of Greece’s bailout by canceling the privatization of the country’s largest seaport and public power utility.

His government next moved to raise the minimum wage, rehire thousands of public workers and restore collective bargaining as well as a thirteenth month of pensions. Such policy changes would violate the commitments previous Greek administrations have made in order to qualify for financial support.

In the years leading up to the crisis, Greece expanded its public sector by an estimated 150,000 workers to over one million, or 21 percent of the workforce.

In the same period, government spending on pensions rose from 12 to 17 percent of annual economic output, reaching the highest rate in the eurozone. Last year, Greece’s own Finance Ministry revealed that three out of four workers benefit from early retirement rules that allow them to stop working before they reach the age of 61.

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