The never-ending Greek fiasco

Exasperated and exhausted by Greece in equal measure, European leaders are now using the equivalent of a political sledgehammer in an attempt to get politicians in the country to see the gravity of the situation. Yesterday, the European Commission suggested that time has run out for a deal, while Angela Merkel threatened that there would be no further bailout if Greek politicians did not agree to the troika’s demands. Particularly contentious for Athens is the troika’s proposal to reduce the minimum wage by 20%, reduce supplementary pensions by 15% and cut the public service headcount down by another 15K. Greek Prime Minister Papademos is apparently shuffling between meetings involving the troika on the one hand and the leaders of the three major Greek political parties on the other. This circus has been going on since before the weekend, so scepticism about any binding deal being reached any time soon is entirely justifiable.

Meanwhile, both the European Commission and the Greek government are now making preparations for the increasing likelihood of a disorderly exit from the euro. Even if Greece agrees to the troika’s measures, Europe and the IMF are now insisting that most of any fresh bailout money be placed into an escrow account specifically earmarked to pay off bond-holders. Also, bailout funds for Greece would only be released once Athens delivers on reform demands. For now, Germany has backed down on the proposal that the EU send a budget commissioner over to Greece with veto power over tax and spending decisions.

Befittingly, Greece is once again beset by a national anti-austerity strike today.