Talks and talks and talks. After so much of time and energy spent on finding a common ground that would lead to a deal, the European Union and Greece are finally exchanging threatening glances. Greece now has less than a week to strike a deal with its eurozone creditors to avoid defaulting on its massive debts and perhaps being kicked out of the single currency area, causing concern in the euro zone. And it’s more worrying that EU officials have held their first formal talks on the possibility of a Greek default, while Prime Minister Alexis Tsipras shows no signs of tension.
The latest turn of events wouldn’t come as a shock because Greece and its creditors have stubbornly refused to budge from their positions which they consider sacrosanct – with Athens maintaining that its creditor are making unjustified reform demands which would wreck its social structure and the creditors arguing that the reforms are non-negotiable and necessary if the country is to emerge from the fiscal morass. Anger and desperation are visible everywhere. On Thursday, the International Monetary Fund said it was pulling its staff out of the talks — a sign of its exasperation at the failure of the Greek government to make progress. EU President Donald Tusk rebuked Alexis Tsipras in blunt terms. “There is no more time for gambling,” he said. The negotiations between the two sides are now at their lowest ebb since Alexis Tsipras became prime minister in January.
Greece has refused to back down from its stance. The Tsipras government is still calling for a debt restructuring and has ruled out pension cuts or labour market reforms that would bring wage decreases. It attacked the IMF for walking out of negotiations on Thursday.
Despite the impasse in talks, a Greek exit from euro or a default on its debt payment is still remote and unpredictable. No one knows, either in Athens or Brussels, whether the anti-austerity government can reach a deal with its lenders before an end-June deadline and thereby avoid putting the country in grave danger of crashing out of the euro zone.
Both sides know that their interests are not served by a split or a parting of ways. While Germany, IMF and other EU officials are airing their frustration and exasperation, officials in Athens are showing optimism and confidence, perhaps a sign that Athens will not push too far that could force an exit.
There will be more talks in the coming days, much of it a repetition of what they have already gone through. The outcome is unpredictable. The situation can worsen, creating a tsunami of shock across the region, or there can a stepping back from the brink. But the world wants this drama to end.
