The coming week will go a long way to dictating whether Greece remains in the euro zone, as a meeting of euro zone finance ministers on Monday is tasked with producing a deal that will keep Greece solvent and which is acceptable to both sides, Reuters reports.
A similar meeting last week, marking Greek finance chief Yanis Varoufakis’ debut, got nowhere over seven hours of talks, the agency says in an article titled “Eyes of the world on Greece”.
“Some of this is down to semantics – the Greeks will not accept an extension of the hated bailout program while bridging financing sounds fine – but there are serious issues of substance too and there is a gulf to overcome,” it says.
The new government’s plan to renegotiate Greece’s debt pile will not fly given the amount of money Athens owes to European institutions and governments.
Reuters argues there is economic logic in easing up on austerity to galvanize growth and increase the tax take and the euro zone may accommodate Greece on that, but Prime Minister Alexis Tsipras is likely to have to move considerably further from where he is now.
“Tsipras says he has a strong democratic mandate to pursue a new deal. The euro zone says Greece owes them a fortune. Both are right. Something must give.”
If the two sides fail again to reach an agreement, the European Central Bank may decide to intervene indirectly.
“A continuation of the deadlock on Monday will immediately shift focus to Wednesday’s bi-weekly ECB review of the ELA limits of Greek banks,” said Deutsche Bank strategist George Saravelos.
“In the event of failure, we would expect the ECB to become more explicit on the timing of when ELA funding would be withdrawn or capped.”