Explaining the Latest Greek Drama

Greeks demonstrate outside parliament in Athens, February 16, 2015
Greeks demonstrate outside parliament in Athens, February 16, 2015 (Lefteris Heretakis)

Time is — once again — running out for Greece. This time the sticking point is a €7 billion tranche from its bailout program. Greece needs the money by July, but European officials had hoped to reach an agreement with the International Monetary Fund about the payment early next week, lest Greece’s debt crisis become an issue in the Dutch and French elections.

The mood in Brussels isn’t hopeful, the Financial Times reports. The expectation is that the creditors will miss their self-imposed deadline.

That would be especially unfortunate for the Dutch prime minister, Mark Rutte, who faces reelection in four weeks. He famously promised voters in 2012 that he would not support any more bailouts for Greece — but then he did. This is the worst possible time for him to be reminded of that broken promise.

There is no immediate risk of bankruptcy, let alone ejection from the eurozone, for Greece. But the closer we get to July, the more markets will worry and the more pressure will rise on lenders to hash out a compromise.

So what’s the problem? Read more

Greece Tries to Weasel Out of Spending Commitments Again

Greek prime minister Alexis Tsipras speaks with German chancellor Angela Merkel in Berlin, March 24, 2015
Greek prime minister Alexis Tsipras speaks with German chancellor Angela Merkel in Berlin, March 24, 2015 (Bundesregierung)

For the nth time, Greece is testing Europe’s patience by circumventing the spending commitments it made to qualify for financial support.

Surprised by a high budget surplus this year, the Greece prime minister, Alexis Tsipras, immediately vowed to use the money to fund free school meals for poor children, top up pensions for low-incomes retirees and freeze sales tax hikes on islands that are struggling to cope with refugees.

Tsipras, who leads the country’s far-left Syriza party, did not consult with his bailout monitors before making the spending pledges. Read more

Greeks Push Through Pension Cuts, Eye Debt Relief

Greek finance minister Euclid Tsakalotos speaks with European lawmakers in Brussels, March 2
Greek finance minister Euclid Tsakalotos speaks with European lawmakers in Brussels, March 2 (European Parliament)

Greek lawmakers pushed through €5.4 billion in savings early on Monday despite violent protests outside parliament and a three-day strike that has brought the Balkan economy to a standstill.

The cuts were required under Greece’s third and latest bailout from the rest of the European Union and the International Monetary Fund.

The country’s far-left leaders, having failed to find a way to honor their election pledge to cancel austerity, hope the latest cutbacks will at least unlock talks about debt relief.

Euclid Tsakalotos, the finance minister, warned that the alternative was “another Greek crisis” that could perhaps lead to “another failed state in the region.” Read more

Tusk Rebuffs Greek Attempt to Circumvent Lenders

European Council president Donald Tusk walks with Greek prime minister Alexis Tsipras to a photo shoot in Brussels, March 19, 2015
European Council president Donald Tusk walks with Greek prime minister Alexis Tsipras to a photo shoot in Brussels, March 19, 2015 (European Council)

European Council president Donald Tusk has refused to call an emergency summit of government leaders to discuss Greece’s latest altercation with its creditors, maintaining that this must be resolved at the level of the finance ministers instead.

A day earlier, Jeroen Dijsselbloem, the Dutchman who chairs eurozone meetings, canceled just such a conference because he said there was no progress to discuss.

Greece has balked at implementing €3 billion in cuts to comply with the terms of its financial rescue package.

Alexis Tsipras, the Balkan nation’s far-left prime minister, sought to elevate discussion to the leadership level to circumvent Dijsselbloem as well as monitors from the International Monetary Fund who insist that Greece honor its agreements.

The IMF jointly administers Greece’s €86 billion bailout — its third since 2010 — with the European Union. Read more

Greece Continues to Drive Businesses Away

The port of Thessaloniki, Greece at dusk, September 3, 2012
The port of Thessaloniki, Greece at dusk, September 3, 2012 (Flickr/Ghagaz)

Are there another people in Europe so determined to shoot themselves in the foot as the Greeks?

Against all the advice of other euro states, they elected — twice — in recent years leaders who vowed to reverse what little progress had been made to liberalize the Balkan nation’s economy. Labor market reforms came undone last year. Privatizations were canceled or pushed back.

The country only agreed to sustain reforms in return for a third, €86 billion bailout this summer when it, once again, teetered on the brink of default.

Now promises have already been broken and targets missed. Greece is typically slow to implement the economic policy changes it commits to undertake. Yet there seems to be no holdup in policies that make things worse. Read more

Greece Rejects Creditors’ Call for Pension Cuts

Greek prime minister Alexis Tsipras speaks at the World Economic Forum in Davos, Switzerland, January 21
Greek prime minister Alexis Tsipras speaks at the World Economic Forum in Davos, Switzerland, January 21 (WEF/Valeriano Di Domenico)

Pensions are at the center of Greece’s latest dispute with its creditors.

The Greek Kathimerini newspaper reports that the International Monetary Fund’s managing director, Christine Lagarde, stressed to Prime Minister Alexis Tsipras during a recent meeting at the World Economic Forum in Davos, Switzerland that his government’s proposal for pension reform was inadequate.

The IMF jointly administers Greece’s €86 billion bailout with the European Union.

But Tsipras has said Greece won’t succumb to “unreasonable and unfair demands” and reportedly told Lagarde “there is no way” he can cut pensions for current retirees.

“One pension is a whole household’s income in the present circumstances,” the far-left leader told parliament last month. Read more

Greece to Miss Privatization Targets Once Again

Ferries in the port of Piraeus, Greece, December 15, 2007
Ferries in the port of Piraeus, Greece, December 15, 2007 (Flickr/Michael)

Greece pushed back the start of the privatization of the port of Piraeus this week for the third time in a month while Kathimerini reports that the country is once again trying to reduce its selloff targets in talks with creditors.

The far-left government of Prime Minister Alexis Tsipras argues that because it needs less money to recapitalize Greek banks than expected, it should also have to privatize less.

Under Greece’s most recent international bailout agreement, however, no direct link between bank recapitalizations and privatizations is made. Read more