EU mulls worst-case scenario on Greece

Accountants shout slogans outside the finance ministry in central Athens on June 12 , 2015 during a demonstration by accountants and tax offices employees against uneven taxation system and huge amount of work due to tax offices merges. AFP PHOTO / LOUISA GOULIAMAKI

ATHENS/BRUSSELS: EU officials revealed Friday that they had held their first formal talks on the worst-case scenario for Greece, but the darkening outlook failed to fluster Prime Minister Alexis Tsipras, who holed up with his negotiators after proclaiming his optimism.

No one knows, least of all in Athens or Brussels, whether the anti-austerity government can reach a deal with its international lenders before an end-June deadline to avoid putting the country in grave danger of crashing out of the eurozone.

But senior European Union officials are taking no chances, and have discussed a series of scenarios, several officials told Reuters. These included a potential Greek default on a 1.6 billion euro ($1.8 billion) payment to the International Monetary Fund, the global lender of last resort, at the end of this month, they said.

While Europe let loose a barrage of warnings, the leftist Greek government exuded calm and optimism. A cheerful Tsipras was mobbed by supporters late Thursday at an open-air concert to celebrate the reopening of a TV station, still wearing the blue suit he had worn at crisis talks that morning in Brussels.

His boisterous mood belied his tough talks with German Chancellor Angela Merkel and French President Francois Hollande Wednesday, and European Commission President Jean-Claude Juncker Thursday. Juncker jokingly called the meeting hall a “torture room.”

The failure to break a stalemate over a cash-for-reforms deal prompted the IMF to withdraw its team. It also convinced EU officials holding scenario planning at a meeting in Bratislava to brace for the worst.

Government representatives, preparing next week’s Eurogroup meeting of eurozone finance ministers, concluded in the Slovak capital that there were three scenarios, and that the best of them, reaching a deal next week, was now the least likely.

The second scenario was a further extension of Greece’s current bailout program, which expires this month at the same time as Greece must repay 1.6 billion euros to the IMF. The third – discussed formally for the first time at such a senior level in the EU – was to accept that Greece could default. The meeting reached no decision or concrete conclusion, the officials said.

Most officials argued it was unlikely that creditors, which include the European Central Bank, would strike a deal on reforms with Athens in time to disburse 7.2 billion euros still available under a rescue program extended in February for four months. “It would require progress in a matter of days that has not been possible in weeks. The reaction of the ECB, the IMF and several member states was extremely skeptical,” one official said.

The Greek representative at the meeting said Athens would do everything to reach a deal in time, other officials said. That would in effect mean an agreement in time to be endorsed by the Eurogroup when it meets in Luxembourg on June 18.

German Chancellor Angela Merkel urged Greece and its creditors Friday to keep pushing for a deal.

“Where there’s a will there’s a way but the will has to come from all sides so it’s important that we keep speaking with each other,” she told a conference in Berlin.

Thursday’s walkout by IMF experts gave Athens one area of common cause with its European creditors. “The nonparticipation of the IMF in the political negotiation amounts to nothing more than putting pressure on everyone - the Commission, the ECB, Greece,” a Greek official said.

A version of this article appeared in the print edition of The Daily Star on June 13, 2015, on page 5.




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