Thursday

20th Jun 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 18 year's of archives. 30 days 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. Johnson vs. Hunt to replace May as UK leader
  2. EU leaders take aim at Russia's role in Ukraine
  3. EUobserver appoints new interim editor-in-chief
  4. Ombudsman: Tusk's staff should record lobby meetings
  5. Tusk now 'more cautious' on top jobs decision at summit
  6. Mogherini: my replacement 'needs security experience'
  7. Irish PM: 'enormous hostility' to new Brexit extension
  8. Merkel hopes to name commission chief by early July

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNo evidence that social media are harmful to young people
  2. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  3. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  4. Nordic Council of MinistersEducation gets refugees into work
  5. Counter BalanceSign the petition to help reform the EU’s Bank
  6. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  7. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  8. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  9. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  10. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  11. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  12. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody

Latest News

  1. Additional summit over top EU jobs looms
  2. EU advisor roasted over Russian media interview
  3. EU must counter Kushner's so-called 'peace' plan
  4. Tusk wants quick deal on EU top jobs at Thursday summit
  5. EU keeps North Macedonia and Albania at arm's length
  6. What's going on in Moldova - and what next?
  7. EU officials prepare for US extravaganza on Palestine
  8. EU urges Swiss to move on talks or face sanction

Stakeholders' Highlights

  1. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  2. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  3. Nordic Council of MinistersNordic commitment to driving global gender equality
  4. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  5. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  6. Nordic Council of MinistersNordic talks on parental leave at the UN
  7. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  8. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  9. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  10. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  11. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  12. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law

Join EUobserver

Support quality EU news

Join us