Greece moved one step closer to a euro exit after the euro zone’s finance ministers said there will be no more
talks on financial support unless the Greek government requests
an extension of its existing bailout program.
Finance chiefs hardened their positions as negotiations in Brussels finished abruptly on Monday night with Greek Finance Minister Yanis Varoufakis refusing to accept European demands. Varoufakis said Greece had no choice but to refuse the statement on offer. “In the history of the European Union nothing good has ever come out of ultimatum,” he told reporters after the meeting.
“There won’t be a meeting where we have to listen to how the world is working,” Austrian Finance Minister Hans Joerg Schelling said in an interview Tuesday. “There will be a meeting only where it’s clear, the letter is there, the request is there, the conditions are confirmed.”
Greece has almost no time left. The current bailout expires on February 28. Failure to reach an accord could see Greece run out of cash by the end of March, forcing Tsipras to consider breaking his election promises to end austerity or contemplate the reintroduction of a separate Greek currency.
The yield on Greece’s three-year bonds rose 76 basis points
to 18.34 percent at 2:22 p.m. in Athens. That compares with 21.1
percent last week, the highest since the debt started trading
again last year, and a record 128 percent in March 2012. Greek
stocks fell 1 percent. The euro, which lost ground Monday, rose
0.7 percent to $1.1429.
“It is a completely new situation, but the general opinion on Greece leaving the euro zone is more or less relaxed,” Michael Schroeder, an economist at the ZEW institute in Mannheim, Germany, said at a press conference. Still, “we actually don’t know what could happen,” he added.
Italian Finance Minister Pier Carlo Padoan does not seem worried, though. He told reporters on Monday night that Greece leaving the euro zone remains “out of the question.”
“I am not worried,” Padoan said. “I am convinced that we will ultimately reach a common ground and a common decision.”
“We’re reaching crunch time for Greece and the euro zone,” U.K. Chancellor George Osborne said as he arrived in Brussels on Tuesday morning. “The consequence of not having an agreement would be very severe for economic and financial stability,” he concluded.
Kamikaze strategy
Greece's authorities hardly seem reasonable to many analysts. Greece plays Russia roulette with their country's future, still insisting that the Eurogroup is deathly afraid of a Grexit and will be the first to give in.
With expressions full of contradictions and numerous false statements, Greece is hoping to win supporters. What Athens has demanded is nothing less than the temporary - and the precise timeframe has not been defined - funding of its state budget by the eurozone, without any conditions, warranties or repayment agreements. That may be their desire, but the Greek government should not lose its sense of reality and start believing its own campaign rhetoric.
Where does the Tsipras government get the confidence that the European
Central Bank will always be on hand to shore up Greek banks with
emergency loans? - Deutsche Welle columnist asks. Common sense dictates that state bankruptcy, with all its consequences, is coming closer and
closer.
Currently, it's not yet clear whether Athens will veer away at the last minute or factor in the crash in its kamikaze strategy.
