Legend has it that whilst the Eternal City burned, the Emperor Nero played his fiddle. This image has been passed down through the centuries as an icon of inaction at a time of crisis. It could be argued that the current Greek administration is doing little more than this whilst their nation is threatened with being drowned in debt and left bankrupt.
The government of Greece, Syriza, came to power on promises to turn back the tide of austerity that they claimed had hurled many Greeks into a humanitarian crisis and to write off half of the debt obligations that the Greek nation freely entered into with the EU and IMF when their financial legerdemain and burgeoning public debt forced them out of the international money markets as interest rates became cripplingly high, threatening the nation with insolvency in 2010 and 2012.
What happened next?
Syriza has been able to obtain a four-month extension to its bailout from the IMF and Eurozone, but disbursement of the remaining €7.2 billion tranche of funding is being delayed until Greece puts forward a credible, detailed plan to meet its obligations. A draft letter which set out Greece’s proposals was described as a good starting point, but more detail was needed before funding could be released. Since then, little has happened leading to frustration amongst Greece’s Eurozone partners.
Greece is antagonising a major creditor, Germany, over war reparations that it claims are still outstanding from the German occupation of Greece in World War II. The Germans believe that the matter was definitively closed some forty years ago. Support amongst Germans for Greece’s remaining within the Eurozone has ebbed away from 60% to just 40% currently.
Can Greece pay?
Greece managed to repay €584 million to the IMF recently, but the coffers are running dry and further repayments are falling due. Greece is hoping to raise €1 billion through a bond auction on 18th March, but it would be a brave investor who takes this on when Greek politicians are telling the population that they intend to discount half of their debt obligations – yields are likely to need to be astronomic.
Frustration with Greece in Germany, at least, was clear in a quote from Finance Minister Wolfgang Schraeuble, responding to a suggestion from the Greek PM that they would be boosting liquidity and would have no problems making payments to civil servants and retirees due on 20th March: “None of my colleagues, or anyone in the international institutions, can tell me how this is supposed to work,” Greek leaders are “lying to the population,” he said.
Greece faces €2 billion in repayments at the end of this week, so one could be forgiven for thinking that clarification and detail of Greece’s proposals was “top urgent”. The chair of the Eurozone group of finance ministers, Jeroen Dijsselboem, clearly voiced the frustration felt within the bloc over the lack of progress:
"My key message today was that we have spent now two weeks apparently discussing who meets whom where, in what configuration and on what agenda and it's a complete waste of time. I cannot be explicit enough about it. "That's why we've said we've talked about this long enough now," he added. "We only have four months…let's get it done."
History has been none to kind to Nero, will Syriza fare any better?