The war of words between, Europe’s potential defaulter –Greece and its creditors goes unending. After heated exchanges of words, both parties are meeting in Luxembourg on Thursday to find a way out of the problem.
Greece immediately needs 7.2 billion Euros to repay its debt to the IMF. Already, the IMF has pulled out from the present talk after Athens declined to undertake some serious expenditure cutting suggested by the Fund.
If the remaining creditors in the field, – the European Council and the ECB, are not extending new loans, Greece will default. Then, a Greek exit from the Eurozone becomes unavoidable.
Here, Greece will become the first country to exit from Euro after it came into existence in 2000. Advanced countries in Europe who pioneered the Euro doesn’t like to see their innovation of the unified currency failing even without completing couple of decades.
A Greek exit will bring more shame to the Euro creators like Germany and France than to Greece. Hence, Greece will not be a lone loser in the event of its exit.
Because of this, the creditors in Europe are yielding to Greek demands. Here, it is not the debtor but the creditors who are under pressure.
Both parties know this and it is the European creditors who are weak compared to Greece.
A dangerous update of the Greek crisis is that there is no change in the Greek mindset. They behave as if that the problem is with the doctor and not due to the disease of financial extravaganza without income.
Greek Prime Minister Alexis Tsipras is insisting that any agreement must be reached at the highest political levels, not among technocratic negotiators.
Certainly he is playing a risky game of confronting an economic crisis politically.
European leaders have announced number of future dates for Greece to come out with a plan. But really, such an exercise will extend Greek bailout programme without getting any financial discipline commitment from Athens.