Greeks Bearing Debts
Europe Closes Rank on Athens

Earlier this week, Angela Merkel and François Hollande corralled Greece’s technocratic creditors and forced them to come up with a unified reform proposal. After two days of tense negotiations, the proposal will be presented today to Greek Prime Minister Alexis Tsipras in what many are suspecting will be a take-it-or-leave-it fashion. Reuters has the details:

Looking for a compromise, the creditors will suggest that Greece should post a budget surplus before interest payments of one percent of gross domestic product this year and two percent in 2016, against 3 percent and 4.5 percent under the terms of the current plan, sources familiar with the proposal said.

Greek PM Alexis Tsipras, seeking laxer terms, yesterday sent along his own reform proposal:

By contrast, the sources said the Greek government, elected in January pledging to end years of bitter austerity, had suggested a primary surplus of 0.8 percent this year and 1.5 percent next year.

Athens also offered to curb early retirements to save on pension payouts in line with previous proposals, but it was not clear if it had offered any new concessions demanded by lenders on labour and pension reform.

Europe’s leaders, however, rejected the Greek proposals as too vague. As Open Europe reports, Eurogroup President Jeroen Dijsselbloem characterized it as “really not enough,” adding that, “the bottom line is not that we can meet each other halfway.”

Such language will not go over well in Athens, where Tsipras’ coalition partners are growing increasingly intransigent. One member of Syriza’s coalition said that if a deal is not reached by Friday, Greece will not make its payment to the IMF. And Greece’s labor minister threatened a referendum if the final deal is not an “honest and forward-looking compromise.”

Fudging Greek finances and kicking the can further down the road has been the eurocrat sport of choice for some time now (one that, as those who remember the accounting behind Greece’s accession to the euro will know, is at times only marginally less shady in its bookkeeping than Europe’s other favorite sport). So we’d be hesitant to proclaim that a final dénouement is truly at hand, however stern a tone the creditors took in presenting this latest deal. But Syriza’s leadership failed to use their golden post-election moment to negotiate a satisfactory compromise, and since at least April have been bleeding hard assets that can only be spent once. Increasingly, the Greek government is simply running out of options.

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