Saturday

2nd Jul 2022

Grexit fears hang over Eurogroup meeting

  • Failure to find an agreement between Greece and its lenders could trigger 'a collapse of all the Greek economy has achieved' (Photo: Eric Maurice)

Greece and its creditors were preparing for a crucial Eurogroup meeting on Thursday (18 June) amid growing concerns of a Greek exit from the eurozone or even the EU.

The alarm was raised by a Bank of Greece report warning that the crisis could get out of control and "relegate" Greece "to the rank of a poor country in the European South" if no deal was reached before 30 June to lend €7.2 billion to Greece.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"Failure to reach an agreement would mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and – most likely – from the European Union," Greece's central bank warned in its annual report on monetary policy.

"A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability."

The consequence would be "a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership"

The bank's governor is Yannis Stournaras, finance minister from 2012 to 2014 in Antonis Samaras' centre-right government.

"The central bank has been warning the Greek government for several months, explaining the consequences and the risks of the situation. It is more on the creditors' side than on the governement's side," an EU source told EUobserver.

"Stournaras is a good technician, while the government doesn't weigh all the consequences," the source said, adding that the bank's report "reflects the pessimism of the creditors".

"[He] has a seat at the European Central Bank's governing council. He is aware of the debates and he sends message."

The speaker of the Greek Parliament, Zoe Konstantopoulou, said the central bank's report was "unacceptable".

“Stournaras has contributed to the fiscal, memorandum-based policy. He now tries, in a non-democratic way, to prevent the ultimate debt write-off claims of the government,” she said.

Meanwhile, talks for an agreement were still stuck on Wednesday, with Greece and the institutions (the EU, European Central Bank and International Monetary Fund) waiting for the other side to present a new proposal.



The discussion between eurozone finance ministers at the Eurogroup could "be pretty short", said another EU official, adding that "many gaps remain between the institutions and the Greek authorities".

"Ministers will certainly conclude that the ball is in the Greek camp," the source said.

The divergences between Greece and its lenders are "not only a fiscal gap, it has very much to do also with the structure of the tax system and with pensions," the source explained.

This "has a fiscal impact in the short run and fiscal sustainability implications in the medium- and long-term which are much more important than people realise."

The IMF and ECB chiefs, Christine Lagarde and Mario Draghi, will participate in the meeting. But if no progress is made, an emergency summit of EU leaders could be organised during the weekend.

A regular EU summit will take on 25-26 June. But it would be very late by that time to draw up an agreement to be endorsed by all member states before 30 June, especially where a parliament vote is needed.



Whenever a deal is clinched, "a hell of a lot of work," will still have to be done, said the EU official.

Greece situation 'dramatic'

ECB chief Draghi has said "urgent action is needed" for a bailout deal, but Greek PM Tsipras says he's waiting for creditors' "realism".

News in Brief

  1. EU Parliament 'photographs protesting interpreters'
  2. Poland still failing to meet EU judicial criteria
  3. Report: Polish president fishing for UN job
  4. Auditors raise alarm on EU Commission use of consultants
  5. Kaliningrad talks needed with Russia, says Polish PM
  6. Report: EU to curb state-backed foreign takeovers
  7. EU announces trade deal with New Zealand
  8. Russia threatens Norway over goods transit

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Nato's Madrid summit — key takeaways
  2. Czech presidency to fortify EU embrace of Ukraine
  3. Covid-profiting super rich should fight hunger, says UN food chief
  4. EU pollution and cancer — it doesn't have to be this way
  5. Israel smeared Palestinian activists, EU admits
  6. MEPs boycott awards over controversial sponsorship
  7. If Russia collapses — which states will break away?
  8. EU Parliament interpreters stage strike

Join EUobserver

Support quality EU news

Join us