International lenders are wary of contributing any more to bailing out the Greeks. So are Greece’s rescuers giving up on the country, and getting ready to let it go off on its own?
In Greece, it’s time for the troika again. Auditors from the International Monetary Fund (IMF), European Central Bank (ECB) and the European Commission have descended on Athens and are scheduled to begin work this week. By mid-September, the experts plan to determine whether Greece has implemented promised austerity measures. Just as in March, when the big issue was a partial cancellation of debts owed to private creditors, the auditors’ visit will be accompanied by a cacophonous choir of comments from all those involved.
The Greek government may be evoking the threat of imminent state bankruptcy, but the creditor states are weaving their own fantasies of a Greek exit from the eurozone and an end to bailout payments. Extreme positions were held, too, in May and June, ahead of Greek parliamentary elections – in the end, there was a compromise.
Decision in September
The new act in the Greek drama is likely to run through mid-September – but it’s certainly not likely to end before Germany’s Constitutional Court decides on the permanent European Stability Mechanism (ESM) rescue fund on September 12. Two days later, EU finance ministers gather in Cyprus, which itself became the fifth eurozone country to ask for a bail-out just days before it took over the European Union’s six-month rotating presidency on July.
Initially, the Greek government was to decide on additional austerity packages in June in turn for a fresh 31-billion euro ($37.4 billion) loan in July. Athens is unlikely to get that next tranche, however, as the new Greek government has failed to submit details of all the spending cuts it has agreed to. Meanwhile, state bankruptcy is hardly impending as there appears to be sufficient money to cover wages and state expenses through mid-September and the ECB has deferred the repayment of mature government bonds. In March, then-Finance Minister Evangelos Venizelos threatened his country’s impending bankruptcy – which did not occur, even though the payment of aid funds was delayed for weeks.