A Greek exit from the euro – “Grexit” – looks increasingly like a real possibility after talks with Eurozone finance ministers broke up with no agreement this morning.
A Greek official said the euro group had attempted to repeat the existing bailout programme, which was an unacceptable and “absurd” offer to the debt-stricken country.
Neither side approached the talks with any confidence of reaching a resolution. Both German and Greek governments accused each other of being irresponsible in committing to their respective stances in the lead-up to the talks.
Greece has just about three weeks of cash left. Tax revenues have plunged and the country’s bailout officially terminates at the end of February. The International Monetary Fund (IMF) and European Union (EU) this morning said there should be no change to the conditions of the €240bn (£178bn) loan.
What’s more, the European Central Bank says that the emergency assistance currently being provided to Greece’s banks is tied to that bailout deal. An EU spokesman, however, did say another meeting was possible this Friday but that it was “up to the Greeks”.
The failure to reach a deal could mean both crises both for Greece’s public finances and its already shattered banking system. A banking collapse could lead to an exit from the euro without European assistance.
Varoufakis had an op-ed in the New York Times today titled “No Time for Games in Europe”, and it goes some way toward explaining his position:
I am often asked: What if the only way you can secure funding is to cross your red lines and accept measures that you consider to be part of the problem, rather than of its solution? Faithful to the principle that I have no right to bluff, my answer is: The lines that we have presented as red will not be crossed.
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