Euro Madness: Greece Is the Word For Impending Financial Doom

AP Photo
The Associated Press

Greece is facing a June ‘cash crunch’ in the latest development in its ongoing fiscal crisis. The country will be unable to find the €1.6bn (£1.1bn) sum it is due to hand the International Monetary Fund (IMF) next month, one of the country’s ministers has admitted.

Speaking on Greek television network Mega TV Nikos Voutsis, the Greek minister of the interior, has revealed that “this money will not be given and is not there to be given”. The Greek state is due to hand over the money in four installments in June, as part of its continuing obligations for its 2011 bail-out.

Mr Voutsis’ comments came as Yanis Varoufakis, the Greek finance minister, told the BBC it would be the end for the euro project if progress stalled.

Mr Varoufakes said that the left-wing Syriza-led Greek government has now “made enormous strides at reaching a deal”, and that it is now up to the ECB, IMF and EU “to do their bit” and “meet us one-quarter of the way”.

According to the Daily Telegraph, one possible alternative if talks stall is that Greece would leave the common currency and return to the drachma. This would be “catastrophic”, Mr Varoufakis warned, and not just for Greece itself. He said:

“It would be a disaster for everyone involved, it would be a disaster primarily for the Greek social economy, but it would also be the beginning of the end for the common currency project in Europe.

“Whatever some analysts are saying about firewalls, these firewalls won’t last long once you put and infuse into people’s minds, into investors’ minds, that the eurozone is not indivisible. It will only be a certain amount of time before the whole thing begins to unravel.”

Syriza’s domestic position was bolstered on Sunday by a poll that showed cash-strapped Greeks remain supportive of the government’s tough negotiating stance although they rejected a return to the drachma – for now.

The poll conducted in May by Public Issue, for the pro-government newspaper Avgi, showed 54% backing the government’s handling of the negotiations despite concerns that the country has been taken to the brink of financial collapse.

A total of 59% believe Athens must resist demands by creditors for further austerity measures, with 89% against pension cuts and 81% against mass lay-offs.

Aware that his government could collapse without a deal that retains the euro, Tsipras warned his far-left supporters, many of them newly elected MPs with little experience of EU negotiations, that they must compromise in talks with creditors.