Greek Negotiations

Whistling in the Dark

Greece Riga AP
Yanis against the world.
  • Why it matters

    Why it matters

    Greece’s lenders are losing patience and openly considering how to deal with a default.

  • Facts


    • Greece has to pay the IMF €770 million, or $834 million, on May 12.
    • Greek finance minister, Yanis Varoufakis, was harshly criticized by his counterparts at a eurogroup meeting last Friday.
    • The current bailout program runs out on June 30 and the ECB cannot continue providing ELA to Greek banks if there is no new deal.
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In the midst of the pale and serious men in suits and ties, one face stood out: Yanis Varoufakis, Greek finance minister and all-round euro rebel, in his open necked shirt and shaved head, beamed as if he didn’t have a care in the world, following the meeting of euro-zone finance ministers in the Latvian capital, Riga, last Friday.

That couldn’t be further from the truth. Mr. Varoufakis had come to the gathering, known as the eurogroup, to plead once again for Greece to be allowed access its outstanding bailout funds. Instead he was reprimanded by his counterparts for his attitude and his country’s lack of progress on implementing reforms.

Greece and the eurogroup have been dancing a tango with each other for months, advancing and retreating on the terms of a deal that remains elusive. One thing is sure: Greece cannot survive past the end of June, when its bailout regime ends.

After that, the European Central Bank will no longer be able to extend its emergency lending to Greek banks, which is keeping the country’s financial sector afloat. The country needs a deal by then.

In Riga, it was not clear how this was going to happen. Ministers were visibly irritated with Mr. Varoufakis, an academic-turned-politician, and with his negotiating style, which is reported to be long on lecturing and short on substance.

In general, the view has taken hold among Greece’s creditors – the European Union, the European Central Bank and the International Monetary Fund – that Athens is simply not serious about implementing reforms they deem necessary.

As a result, they are refusing to hand over the remaining €7.2 billion, or $7.8 billion, in Greece’s current bailout program until Mr. Varoufakis finally convinces them that he is serious about those reforms.

The sense of frustration is growing, and with it the risk that Greece could end up defaulting and leaving the 19-country euro currency area.

Mr. Varoufakis felt the wrath of his euro-zone peers last Friday.

“All the ministers told him: This can’t go on,” the Spanish finance minister, Luis de Guindos, said the day after the Riga meeting. “The feeling among the 18 was exactly the same. There was no kind of divergence.”

Mr. Varoufakis does not seem to have been cowed by his colleagues’ opprobrium. On Sunday, he tweeted: “FDR, 1936: ‘They are unanimous in their hate for me; and I welcome their hatred.’ A quotation close to my heart (& reality) these days,” referring to late U.S. president, Franklin D. Roosevelt.

The combative finance minister and more conciliatory Greek prime minister, Alexis Tsipras, sought allies in Europe when they first came to power, hoping that other countries would back their rejection of austerity.

While some, such as Italy and France, gave the new Greek leaders a warm reception, as it has come down to the wire, the rest of the euro zone has banded together in insisting that Greece implement painful reforms to its national budget, which would expose the ruling Syriza party to the wrath of Greek voters.

While the Greek government has made vague noises about how it is prepared to that, their actual reform proposals have fallen short of lender expectations. The impression is growing that the Athens administration is simply playing for time.

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