By April or May or even before, that makes no difference, Greece will run out of cash and the government will have no money to pay salaries and pensions. Unless ECB makes the payments to Greece as scheduled. This means that the “bras de fer” between the Greek government and the Eurogroup, in one way or an other, will come to an end.
Under the circumstances there are two options to consider. Either the new government of Greece and the Eurogroup will come to an agreement before the country runs out of cash, or Greece will go bankrupt.
In this agreement Greece will reiterate obligations stipulated by the governments before. Then some new realistic terms will be provided so everyday life will become easier. This will allow ECB to continue financing.
In Europe, compromise is the king and this means that the two parties must find a mid way. The interests of the lenders must be served but also the catastrophe of a nation must be stopped. An honest new deal would be an extension of the debt repayment schedule for fifty years of more, with lower interest rates and a certain grace period as the present repayment scheme is unrealistic and the country is in ruins.
The first option, an immediate agreement between Greece and the Eurogroup seems rather remote. Before but also after the recent general election in Greece, the SYRIZA (now) ruling party, claimed that will not recognize the terms stipulated by the previous governments but will look for a new agreement.
On such grounds, the Eurogroup and in particular the big power behind it, Germany, refused any negotiation. They claim that Greece has to meet its obligations, full stop. On the other hand, the new Prime Minister Alexis Tsipras did not take any step backwards in this confrontation. The Greek government is bound by its electoral rhetoric, and is cornered both by the Greeks and the European Left, as they all expect Tsipras to trigger the end of austerity.
Germany and the Eurogroup are right because obligations are obligations and must be met. This is the way business is done for millennia. However, the Greeks succeeded in turning a business matter into a political issue. Things are changing rapidly all over Europe in the same direction and many Member States are in favor of a financial relaxation, which will terminate austerity and will aviate development. Politics return in the life of Europeans.
Point in question is for Angela Merkel and the Eurogroup president Jeroen Dijsselbloem to realize that Alexis Tsipras has turned the matter into political and thus they must look for a political solution. Tsipras brought the game in his court, as politics is something he masters. When he was at high school, he was elected in the school’s 15-member student committee preaching revolution while Angela Merkel was most probably in Komsomol of DDR learning party discipline.
This is the issue. Different cultures, different mentalities, different philosophies. Tsipras thinks politically, acts politically and has no money. Merkel has a Cartesian logic, Lutheran discipline, Calvinist approach, money and no politics. This is not only a clash between North and South but also a clash of political cultures.
Logic wants that Greece and the Eurozone reach an agreement before it is too late otherwise, unless Greece gets bridge assistance, will go bankrupt. Northern Europeans claim do not care less. This is the simple technocratic reading. The political reading is much more complicated.
It should be made clear that there are two cardinal differences between the bankruptcy of a country, a concept rather unknown in our western society and the bankruptcy of a company of which people is aware of.
When a company goes bankrupt, the owners cannot avoid it and it signifies the end of the company. When a country goes bankrupt it goes because it had decided so, as it has endless alternatives and eventually could have avoid it. Furthermore bankruptcy of a country does not mean the end of the country. The country will continue to exist even after bankruptcy, as it was a political decision and not an economic necessity.
Lets suppose that Greece goes bankrupt. Starving people will continue to starve but there will be immediately endless demonstrations all over the country with bank and supermarket-runs, much disorders and much animosity. At the same time, there will emerge solidarity demonstrations in Spain, France, Italy and other places because parties of similar orientation to Greek SYRIZA do exists all over Europe, especially in the South where poverty is striving, and are waiting in the corner.
It takes not much of political understanding to realize that if Tsipras decides to take a tour around and salute demonstrators in Spain from a balcony together with Pablo Inglesias and similarly in other places people will be gathered by million. And he will, as he should now be feeling as “Dannythe Red” of May 1968.
Side effects of demonstrations throughout Europe, both in the south and Europe proper, will include riots and raid of shops and supermarkets. In this context, a random event, i.e. the death of a demonstrator may lead to unforeseen and uncontrolled situations. From there on, a wave of generalized social unrest in Europe will be difficult to avoid and sky is the limit.
This may mean a possible bankruptcy of Greece and it is this that European leaders must avoid.
Therefore, the initial though of the hardliners to punish Greece in an exemplary manner so to pass a message to other countries to behave, may bring opposite results. Instead of fear and conservative swift, rage and riots may prevail as austerity for most Europeans has trespassed the red line.
Finally, it seems that a good approach to the Greek situation would be to find an intelligent way to support Greece, stop austerity and put Europe in the orbit of development. In such a decision, Europe will find political support from the USA as Washington has strategic interests to maintain Europe united and the Euro currency intact.
Those who made right things do not write history. Nobody remembers them. History is written by mistakes. Indeed who will forget that in 30 January 1933,Germans democratically and with their vote brought Adolf Hitler to power?
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The Greek calendar this week;
Starting this evening (Sunday February 8), the new government will present its policy statement, which will end Tuesday midnight with the vote of confidence for the new government. Wednesday, February 11 (17:30 hr.) there will be an extraordinary Eurogroup meeting for Greece. In the policy statement the government is expected to be tough, in line with its pre-election positions yet it is likely that will come with a compromising attitude towards Europe starting with the Eurogroup meeting of Wednesday. Eventually the situation will be cleared after a private meeting between Angela Merkel in Alexis Tsipras, yet to be set.
http://www.neurope.eu/article/if-greece-let-bankrupt