Economist: Greece ‘outgamed’, trouble ahead

economistThe turbulence of the last few weeks may come to be remembered fondly next to the trouble to come, claims the Economist.

For Greece -it explains- will not be able to return to the capital markets when the bail-out extension expires at the end of June, and will therefore need to secure a long-term financing deal with its euro-zone partners before that.

Most will call this a third bail-out; Mr Varoufakis’s preferred term is the sunnier-sounding “contract for recovery and growth”. Regardless of the nomenclature, the terms of the deal will be extremely difficult to iron out, says the British magazine.

The conditionality that the Germans and others will insist on as the price of further support will run directly counter to Syriza’s promises to cut Greece’s shackles to its creditors. Unlike the second bail-out this deal will be “owned” by Mr Tsipras; he will not be able to blame his predecessor for it.

Worst possible time

And the deadline comes at the worst possible time for the Greeks, because it faces bond redemptions worth €6.7 billion in July and August. This is why they had originally sought a six-month extension. Mr Tsipras may feel obliged to put the outcome of the talks to a referendum, or to call fresh elections.

Amid the fretting over the euro in the last few weeks, a softer currency has been debased: that of trust.

The Germans and others were perhaps guilty of expecting too much too soon from a party elected on an explicit promise to break with the old ways, but Syriza bears the brunt of the blame.

It has postured and provoked, making references to Germany’s Nazi past, and jeopardised potential allies in its battle against austerity. It badly mishandled the battle over its bail-out extension, lecturing its euro-zone partners when it ought to have sought accommodation.

 

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