Weeks of agonizing negotiations, last minute compromises, angry walk-outs, histrionic hissy fits ended last week in a four month extension of the Greek bailout. But now just days later, it turns out that Greece is running out of money so fast that it could have trouble meeting its repayment obligations to the IMF through the end of March. The Wall Street Journal:
Greek Finance Minister Yanis Varoufakis, in an interview with the Associated Press over the weekend, said the government would make debt payments to the IMF its priority, vowing to “squeeze blood out of stone” to repay it. A Greek government spokesman couldn’t immediately be reached for comment.
There are several overlapping problems at play here, but it’s important to understand that at the end of the day, the government’s biggest problem is the lack of support from the Greek people. Not political support—Syriza is still riding high in the polls—but economic support: the same Greeks who cheered Syriza on against the eurogroup were also (very prudently) taking their money out of Greek banks so fast that they undercut the government’s already feeble position in the talks. The new crisis is being driven by the persistent failure of Greeks to pay their taxes—and the inability of the Greek state to perform such elementary tasks as collect what is owed to it. Poor tax collection means that the Greek government won’t have enough money to pay its bills, and so must come back to the creditors it has enraged, hat in hand.This is a big problem for Greece: the lack of a serious (as opposed to a flag-waving and chant-repeating) consensus on how to dig themselves out of the hole that they spent decades digging deeper. In an ideal world, the eurozone would have set up incentives from the beginning so that Greece would have spent the last ten years gradually exiting the pit rather than entrenching itself further in it. But “ideal world” and “eurozone” aren’t words that fit well in the same sentence. As it is, the Greek government seems locked into a policy of spitefully taunting its eurozone partners to keep its poll numbers high, fundamentally because it can’t think of anything else to do.What Greece needs most now would be a group of thinkers and politicians to work on a new, post-Syriza approach to the crisis that could gain more support from chastened Greek voters and unhappy eurozone partners as the dead end nature of Syriza’s approach sinks in. But for now the outlook seems clear: more crises, more unhappy compromises, more lies, more decline.