Greece is back at the cliff edge

Greece’s prime minister, Alexis Tsipras, the leader of the anti-austerity Syriza party, met European Union (EU) leaders this week in an effort to unlock vital payments to stave off national bankruptcy.

Greece has been raiding the reserves of its public health service and the Athens metro to service debts and stay afloat. But if it can’t secure aid by mid-April, economists reckon it will run out of cash and may crash out of the eurozone as a result.

On 20 February EU policymakers agreed to extend Greece’s bailout programme until June in return for a comprehensive list of reforms designed to boost long-term growth. Greece’s first draft of this list was widely dismissed as inadequate, and it has promised to produce another by Monday 30 March.

What the commentators said

So much for four months of breathing space, said The Wall Street Journal. “It took Greece barely four weeks to roll back to the cliff.” The government has failed to deliver on reforms, and has reneged on a central commitment of the February deal: not to push through major changes in fiscal policy without consulting creditors. It has unilaterally legislated for food stamps and free electricity for low-income families.

It doesn’t help, added The Economist, that instead of working hard on a deal, the Greeks have preferred “lobbing incendiary political jibes”. The defence minister threatened to flood Europe
with migrants, including jihadists.

The justice minister demanded $170bn in war reparations. And Tsipras brought forward a meeting with Russia’s Vladimir Putin. The “crude” message was that Putin “might be only too happy to help a fellow Orthodox country that dislikes sanctions on Russia”. If Greece doesn’t stop squandering opportunities, it may find that its chances have run out.

European leaders and investors are increasingly convinced that a “Grexit”, however disastrous for Greece, wouldn’t trigger a wider crisis, said The Wall Street Journal: bond yields have stayed low in other peripheral states. “Europe is growing bored with Greece’s economic tragedy and especially its political farce.” Germany certainly won’t compromise, said The Daily Telegraph’s Jeremy Warner.

Tsipras will have no option but to “buckle under” if he wants to stay in the euro. Having plunged Greece back into turmoil just as it showed signs of stabilising, Syriza is now also likely to secure far less debt relief than a more conciliatory approach would have produced. We are back where we were before Syriza’s election in January – “only with Greece another couple of rungs down the ladder of economic misery”.

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