The Syriza party swept to power in Greece’s general election at the end of January on a raft of promises to roll back austerity; end Greece’s “humanitarian” crisis; and see half of the nation’s debts written off. They were also keen to halt privatisations and seek reparations for war damages and a “forced loan” from Athens to the Third Reich which Germany believes were resolved decades ago. Greece has been able to secure an extension to its bailout, subject to its submitting a list of creditable reforms with sufficient detail to satisfy its Eurozone partners. The remaining tranche of €7.2 billion would have been long since released to the outgoing government who were slowly implementing the economic and social reforms demanded as conditions of Greece’s two EU/IMF bailouts. Greece was adamant that the “Troika” of EU/IMF/ECB officials would have no future role to play in the affairs of Greece.
Eurozone partners are adamant that Greece will not get the funding (which would at least provide a breathing space) unless the reforms add up and this has led to intense speculation as to when Greece’s existing funds will be exhausted. Greece must meet some obligations now, and in the coming weeks, or risk a sovereign default which could precipitate it exit from the Euro.
This week, Greece is due to repay part of its debt to the IMF and needs to find €450 million. In an interesting reversal of rhetoric, Greece’s finance minister, Yanis Varoufakis, has said that the debt will be honoured, noting that Greece would meet: "all obligations to all its creditors, ad infinitum". This is quite a departure from Syriza’s election promises, but requires additional financial support from Greece’s partners that they have stated is conditional upon “Greece honouring its obligations”. This would seem to be diplomatic language for saying that Greece must carry out the reforms that were promised as conditions of the two loans. Already, there have been rumblings within the “coalition of the left” which forms the Greek government of back-tracking. Former PM Antonis Samaras has indicated that he would lend his support to a grand coalition to keep Greece in the Euro, but the offer was quickly rebutted.
For her part, Christine Lagarde, head of the IMF noted: "I expressed my appreciation for the minister's commitment to improve the technical teams' ability to work with the authorities to conduct the necessary due diligence in Athens, and to enhance the policy discussions with the teams in Brussels, both of which will resume promptly on Monday.” A Troika by any other name would smell as sweet…