The game of chicken between Greece and its creditors escalated this week. After talks broke down in acrimony last Monday, markets remained hopeful of an agreement by the end of February, when Greece's bail-out programme expires. After that, Greece would be without an EU financial backstop for the first time since 2010. It is likely to run out of money a few weeks afterwards.
Any extension of its bail-out programme will require parliamentary approval in some states, which moves the deadline further forward if a new deal is to be reached by the end of the month.
On Wednesday, Greece revived a plan to water down some reforms, a move that ran into German opposition.
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What the commentators said
The eurozone insists on sticking with the conditions that come with the current bail-out programme. But it has also signalled that it will consider revisiting the conditions. So the gap between the two sides "is more semantic than real". Yet "a deeper lack of trust" has hindered progress.
Greece thinks agreeing to the current programme means it will never be changed; the eurozone reckons any transitional period will be a pretext for Greece to reverse reforms already implemented.
Even assuming the two sides can manage a short-term fudge, there doesn't seem to be enough common ground to agree a long-term deal after that, said Simon Nixon in The Wall Street Journal.
Athens would have to pay an impossible 20% on three-year debt without European help. So it would need an extension of at least two years, during which it has to roll over €24bn of financing.
A new bail-out would inevitably come with conditions. Yet the new Greek government was elected on a pledge to end bail-outs and foreign oversight. European authorities and markets, who this week appeared sanguine about a potential Grexit, may sooner or later have their confidence put to the test.
Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.
After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.
His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.
Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.
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