The Greek government constantly repeats the refrain that it is close to a deal with its creditors that would release the final funds from its bailout loan. The Greek prime minister,Alexis Tsipras, claims talks wiith Angela Merkel and Francois Holland, the leaders of Germany and France, were “friendly and constructive.” However, there was no breakthrough agreement. The creditors are still demanding Greece agree to pension and labour market reforms that so far the Syriza government has claimed are “red lines” that cannot be crossed. Previous red lines concerning tax changes and privatization have already been crossed. The same could happen with the last remaining two, and probably these remaining red lines must be crossed if Greece really wants a deal.
In spite of the lack of any breakthrough on remaining issues, Tsipras says he hopes to reach a deal within days. The EU and IMF creditors are less optimistic and say the talks are moving too slowly for that to happen.
In total next month, about 1.5 billion euros ($1.7 billion US) come due next month with 300 million euros due on June 5. Nikos Filis spokesperson for the Syriza party’s legislators said: “Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5. If there is no deal by then that will address the current funding problem, they won’t get any money,”
Filis pointed out that it was a year since the creditors had released any bailout funds to Greece. As a result he claims there is no money to pay creditors.The government has said it will pay pensioners and public workers with whatever cash it has rather than make the debt payment. The government had to raid pension funds and collect cash from local government surpluses to keep afloat, and only was able to make the last payment to the IMF by drawing money from a reserve IMF account. At the time that payment was made Tsipras also threatened not to make it if he did not have enough money left to pay pensions and wages. This new threat may be seen by creditors as just another bluff to put pressure on them to reach a deal. It did not work last time and it is unlikely to do so this time.
Nevertheless, with each repayment the cash situation is getting worse. The government has yet to impose capital controls or freeze deposits. As a result, funds are flowing out of banks and even out of the country in case there is a forced exit of Greece from the Eurozone. So far the Syriza government gives no sign of planning for such an event. At a conference in Athens speakers warned of catastrophic consequences if Greece were to exit the Eurozone. However, not every analyst agrees with this. The conference appears designed in part as a propaganda device to push the case for remaining within the zone.
The Syriza government is already beginning to experience protests at delays in funding and pay for medical personnel. A 24-hour strike was called on Wednesday:
Public hospitals were shut down in Greece as workers initiated a 24 hour strike on Wednesday to demand delayed pay and an increase in hospital personnel. Medics and nurses demonstrated in front of the Health Ministry in Athens and were joined by pensioner associations. In solidarity with the demands of the health care sector, workers from other public services joined the strike, bringing the country to a standstill.
The debt crisis in Greece is far from over as even larger payments are due over the summer months.
