The new socialist government of Greece is not having much success convincing its European creditors to forget about billions of dollars in debt, and then loan Greece even more money. Bloomberg News reports Commerzbank AG is doubling the odds of a Greek exit from the Eurozone to 50 percent, which sounds like a polite underestimation of the odds, given the sudden and acrimonious end of the latest debt talks.
Bloomberg reports that the talks, held in Brussels, ended with some discord between Greek Finance Minister Yanis Varoufakis and EU negotiators. With no resolution on the table, as Greece rejected terms proposed by the EU, neither side is closer to a resolution that would keep Greece in the Euro and paying its debts on time. The deal currently active expires at the end of the month.
In theory, the talks have only been suspended temporarily, but the condition for resuming them is Greece agreeing to terms that it has grown increasingly belligerent about rejecting. “In the history of the European Union, nothing good has ever come out of ultimatum,” sneered Greek finance minister Varoufakis, insisting that his government is willing to discuss an extension of its aid package if it’s an “honorable agreement” concluded on “the right terms” – i.e. the terms no sane European minister would ever agree to. The EU portrayed the offer on the table as giving Greece about 30 percent of what it wanted; Greece dismissed the offer out of hand as “absurd,” “unacceptable,” and a waste of everyone’s time.
Greece’s plan to weaponize its own debt and present itself as a “too big to fail” investment pit Europe can never stop pouring euros into has frightened off too many of its potential marks. “Without a deal, Greece could run out of money by the end of March, forcing [Prime Minister Alexis] Tsipras to consider abandoning his promises to the electorate or even leaving the single currency,” Bloomberg News predicts. Evidently Europe’s finance ministers think running out of money will focus Tsipras’ mind on international reality, since getting bounced out of the Eurozone might be the best outcome for everyone over the very long term, but it’s certainly not going to help Tsipras keep his wild chicken-in-every-pot spending promises to the people who elected him.
Reuters is reporting today that Greece will ask for an extension of its existing loan agreement on Wednesday, but it remains to be seen if they have agreed to the austerity requirements set forth by their creditors. If not, this might just be another opportunity for Tsipras to loudly repeat his demands, and call everyone else unreasonable for meeting them.
Adding to those suspicions, the BBC says Greece is going to stage a formal vote on scrapping its austerity restrictions on Friday, with a defiant Tsipras declaring, “We will not succumb to psychological blackmail.” He also chastised German finance minister Wolfgang Schauble for a relatively mild expression of exasperation that the Greek government doesn’t seem to know what it wants, portraying Schauble as having insulted the Greek people by speaking “condescendingly” to them.
As the BBC notes, the Europeans cannot afford to let Greece push them around, because other government may start making the same debt-forgiveness demands while Tsipras cannot fail to deliver the shower of free money he promised his constituents. It looks as if Greece intends to keep playing its austerity games until it literally runs out of money, at which point the tenor of these negotiations will become either more reasonable, or vastly more unpleasant.