Friday

13th Dec 2019

Greece and lenders 'playing chicken' over euro exit

  • ECB chief Draghi spoke of 'unchartered waters' (Photo: europarl.europa.eu)

The stand-off between Greece and its lenders deepened over the weekend ahead of a meeting of euro finance ministers on Friday (24 April), with both sides exchanging barbs over the risk of a Greek default and its consequences for the eurozone.

On Friday, Eurogroup president Jeroen Dijsselbloem said both parties should avoid "a game of chicken to see who can stick it out longer. We have a joint interest to reach an agreement quickly".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

  • Dragasakis hinted at possible snap elections or a referendum if no agreement could be found (Photo: Odysseas Gp)

It is, however, precisley what they are doing.

EU and International Monetary Fund (IMF) leaders warned that Greece had to make quick progress to finalise a list of reforms that would enable it to receive a €7.2 billion loan.

But they hinted that a Greek default could be managed by the eurozone.

"More work, I say much more work is needed now. And it's urgent," said European Central Bank (ECB) chief Mario Draghi in Washington, where he was attending the IMF’s Spring meeting.

"We are better equipped than we were in 2012, 2011, and 2010," he added, referring to the years when fears of a eurozone break-up were at a high.

"Having said that, we are certainly entering into uncharted waters if the crisis were to precipitate, and it is very premature to make any speculation about it," Draghi also said.

French finance minister Michel Sapin was even clearer in warning that Greece has more to lose.

"If something damaging happens, it will be for Greece that it will be serious, for the Greek people, not for the other countries of the eurozone," Sapin told reporters in Washington.

Greek finance minister Yanis Varaoufakis, for his part, warned that his country's exit would cause major problems for the rest of the region.

"Some claim that the rest of Europe has been ring-fenced from Greece and that the ECB has tools at its disposal to amputate Greece, if need be, cauterize the wound and allow the rest of the eurozone to carry on," he said on Spain’s La Sexta channel

"Once the idea enters peoples' minds that monetary union is not forever, speculation begins ... who's next? That question is the solvent of any monetary union. Sooner or later it's going to start raising interest rates, political tensions, capital flight."

In Athens, Greek ministers repeated that the government is not ready to agree to everything the lenders ask.

"There is no way we would cross red lines that we have set," said Greek deputy prime minister Yiannis Dragasakis in an interview with To Vima.

Dragasakis hinted at possible snap elections or a referendum if no agreement is found.

On Saturday, quoting sources in Athens, Germany’s Der Spiegel reported that Greece would sign on Tuesday a gas deal with Russia.

The deal would see Greece participate in the Russia-led Turkish Stream pipeline project, in return for a €3 billion to €5 billion loan which would be repaid in 2019, once the pipeline is completed.

But the report was denied by president Vladimir Putin’s spokesman in Moscow.

With Greece risking a default in May, when it has to repay €4 billion in loan and bonds, talks with the eurozone are still in a deadlock.

Athens continues to refuse the reforms demanded for its labour market, pensions, and VAT, and to undertake privatisations. Meanwhile, EU and IMF experts say Greece is still not providing enough details on its finances.

Technical talks were held over the weekend and a euro working group, at deputy finance minister level, is to take place on Wednesday.

This meeting will not bring an agreement that would allow finance ministers meeting in Riga on Friday to decide to unblock a new loan for Greece.

But it will be an opportunity to defuse what could become an out-of-control situation.

Schaeuble and Varoufakis: worlds apart

Washington got a snapshot of eurozone politics when the two protagonists in the Greek impasse voiced opposing world views at a think tank event on Thursday.

Greece raids public sector coffers to pay pensions

The Greek government is forcing the transfer of public sector money to the central bank so it can pay pensions and salaries as the impasse with its international creditors continues.

Tsipras asks for quick deal

The Greek PM met with Angela Merkel and Francois Hollande Thursday to try to shore up political support in talks with the country's lenders.

News in Brief

  1. UK exit poll gives Johnson majority of 86
  2. Orban: 'financial guarantees' to reach climate neutrality
  3. Merkel hopes EU leaders agree 2050 climate-neutrality
  4. Czech PM: nuclear energy needed for climate neutrality
  5. Hungary: Climate target is burden, EU should help
  6. Malta PM urged to step down ahead of EU summit
  7. France rolls out new pension scheme amid protests
  8. Germany accused of aiding war crimes in Yemen

Feature

Promises and doubts: Africa's free-trade adventure

The EU is hoping that a continent-wide free trade agreement in Africa will help lift millions out of poverty and help solve issues of security and migration. But its message of values and equal partnership do not resonate with everyone.

Opinion

Why von der Leyen must put rights at core of business

Ursula von der Leyen's in-tray must include those European executives on trial for systematic workplace harassment, the break-up of European slavery rings, and allegations of European companies' abuse in palm oil, including child labour, land grabs, and deforestation.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. EU leaders cagey on 'Future of Europe' conference
  2. Pressure mounts to grill Malta's Muscat at EU summit
  3. Revealed: little evidence to justify internal border checks
  4. Europe needs to make mind up on relations with Africa
  5. Leaders face crucial EU summit for climate action
  6. Leaders to battle on climate target and money at summit
  7. Von der Leyen: 'Green Deal is our man-on-moon moment'
  8. North Atlantic mini states in geopolitical turbulence

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us