The Germans have made it clear that they will not endorse a bridging loan to Greece. Any such deal would require the approval of the parliaments of other Eurozone nations and needs to be unanimous, so Mr Tsipras and his friends will have to think again. The Eurozone group has given Greece until today (Friday) to decide if they wish to continue with the bailout as originally agreed and (potentially) get a further €7.2 billion from the EU/IMF bailout fund – subject to approval from the Troika of EU/IMF/ECB technocrats – the very same people that the new Greek administration refuses to talk to.
It is estimated that without further fresh funding, Greece will be unable to meet her financial obligations by the end of the month. For their part, Greece has been lobbying for a bridging loan of, oh, I don’t know, erm say €7 billion to tide it over for the next six months. Germany has effectively put a stop to this by applying a unilateral veto – in the event, Germany would not be the only Eurozone state to refuse what Greece is asking for; simply Germany has the most prominent role and has committed a larger proportion of funds to the bailouts that Greece has already benefitted from.
There is no existing mechanism for a nation to leave the Euro, but then again, there is no existing protocol for a member state to renege on its debt and refuse to honour financial deals that it has signed up to, so showing Greece the door must be a realistic proposition. The austerity measures that were conditional upon the granting of the two bailout packages to Greece were never intended to cause hardship (but, undeniably, some Greeks are experiencing real hardship as a result of the reforms insisted upon by the IMF and EU). Instead, they were designed to place the Greek economy on a sustainable footing which would ensure its long-term prosperity.
One does not need to be an economics wizard to see that austerity needs to be tempered with a degree of social support and policies which are designed to produce growth. Perhaps the Greece debacle will result in a softening of austerity across the EU with an aim to cut wastage and inefficiency, ensure taxes due are received (notably from big corporations), but at the same time, foster policies which will move more people into employment, so boosting growth, spending and tax returns – easy, isn’t it?