Greece will probably stay in the Eurozone but at what cost?

“We will do anything you want, but please open our banks next week, will you?” This could be what Alexis might as well be begging from Mario at the EuroSummit of last Tuesday. From left to right, Alexis Tsipras, Prime Minister of Greece and Mario Draghi, Governor of the European Central Bank (Council TVnewsroom, 07/07/2015)

The technical teams of the European institutions are now discussing the Greek proposal which was approved yesterday evening by SYRIZA’s governmental council and submitted to the institutions minutes before the deadline in order to have a final agreement at tomorrow’s Eurogroup. The fact that the Greek government has come up with a more professional and as close as it can get to the institutions’ proposal is facilitating things in technical but also in political level.

The German side expressed by its Finance Minister Wolfgang Schäuble revealed that the largest economy in the EU is open to discuss about a small debt restructuring in exchange of immediate deep reforms accepting the view of the International Monetary Fund (IMF). This statement comes at the most crucial moment where a mutual agreement sounds as the only way that will be beneficial for everyone.

But even if the final agreement is not going to refer to a potential debt restructuring, even in that case, the Greek government has been elected to remain in Eurozone and EU at all costs and sign it. The problem will be if the rest of European leaders have different opinion and don’t want to make a mutual deal. Thus, being unable to make the Greek government resign they are willing to further sink it to the bottom by forcing it to take further austerity policy measures.

Final proposal

This is the last and most critical discussions that are taking place between Greece and European Central Bank (ECB), the IMF and the European Commission. All sides are tabling this very moment to agree on all aspects of the three-year programme and the almost 12 billion euros structural reforms and measures to be taken by the Greek government late last night. Friday the 10th is the most crucial day since it will determine whether the agreement will be cut leading to a Eurogroup and a EU Summit this weekend or it will throw Greece out of the EU; to the abyss of bankruptcy and drachma printing.

The renewed proposal that was submitted by the Greeks is believed to contain similar to the institutions measures regarding VAT rates increase and early retirement rules which reveals the willingness of Greece to strike a deal now. The point that remains to be seen though is whether the EU leaders want to humiliate the Southern country by continuing the five-year austerity policy or they are prepared to practically aid by adding to its growth and prosperity. The latter can be achieved not only by fundamental reforms but by a debt restructuring as well.

Berlin plays down its strictness

Wolfgang Schäuble stated that Germany suddenly considers now a small debt restructuring, which is unprecedented taking into consideration his stance against Greece’s debt crisis but in line with the recent report published by the IMF. This report favors a Greek debt relief which is characterised as mandatory.

Thus, judging from the latest events on this issue, we can clearly see that Germany is slightly changing its attitude to the negotiations by leaning to the Greek side attempting to close the deal and keep Greece within the EU.

One of the things that the German politicians keep on shouting is that the Greek government is not implementing all the needed measures which according to them are going to revive the economy. The German Finance Minister told his Greek counterpart at the last Eurogroup that “Greece needs to implement reforms to win the trust of its eurozone partners” and urged him to “Just do it!”.

Greek government seeks political approval

Late last night, the Greek government submitted the proposal not only to the institutions but also to the Greek Parliament in order to be approved by the Committee and Plenary. This will be a very strong “negotiating card” in the hands of Alexis Tsipras who will show Brussels that the Greeks have the political will to proceed to structural reforms as soon as possible.

However, the Greek Premier is not going to move to a unilateral action before Saturday’s Eurogroup meeting where the Finance Ministers of the Eurozone will decide on the faith of Greece. Mr Tsipras wants just to make it clear that the Greek parliament will vote for the final agreement making it a law of state to implement all the measures included in it at once.

Just three days left; No Grexit is foreseen

There is no time left for Greece which made the last attempt to close the coveted deal for a financial package from the European Stability Mechanism (ESM) in order to cover its financial needs for the next three years.

It is now up to the institutions’ and leaders’ hands to decide whether the final proposal is adequate to prevent a Grexit or Greece will be the first country in Eurozone’s history to leave the bloc once and for all.

All the evolutions during the last 2 days reveal the willingness of both sides to reach a deal. From the resign of Yanis Varoufakis, ex-Finance Minister of Greece, to the by far better and closer to the institutions demands proposal of the Greek negotiating team, till the acceptance of a possible debt restructuring by Berlin.

All in all, a deal may come but it is not sure yet if it will help Greece overcome this long-lasting crisis since the measures that need to be implemented are harsh and painful for the lower and middle class people.

Thus, everything reveals that there is not going to be a win-win situation after all and the Greek citizen is once more going to be the one to lose from all this mess.


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