It seems that last week’s stress within the EU has not ended yet. German Chancellor A. Merkel was giving Greece final warnings during the G7 summit, as a result of the failure of Greece and SYRIZA to apply the necessary measures to be able to pay its debts or even parts of, Merkel made it clear that her country will stand by the European partners and that Greece has to implement the required measures.
Greece seems to have been playing a game to gain more time, something that has increased the tension between Greece and The EU. Yet Greece did not stop there, the Greek Prime Minister Alexis Tsipras has added more wood to the fire while criticizing J. Claude Juncker-The president of the European Commission- after the latter accused Tsipras of not being able to pull a rabbit of his hat and refused to take Tsipras call.
ECB’s Noyer cliarified that, contrary to Tsipras’ assertion, a Grexit is not a problem for the Euro Zone
Greece, as instructed by the EU needs to work a several reforms such as the reduction in number, and employees of civil services and pensions cuts, as well as reforming the Value Added Taxes (VAT).
The deadline is the end of June and it is seems that Greece does not have much time to reform and does have the will to reduce pensions and salaries, especially after Tsipras has recently made it clear that his people have suffered enough austerity and that he does not wish to put the country again in a position to suffer any further. Tsipras called on measures to reduce the debts weight for a smoother reform.
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What about the other PIGS?
Both Greece and the EU know the consequences of the tension caused due to the negotiations, yet the EU would not want this negative energy to spread for fear of Portugal and Spain and Italy copying Greece’s path, especially now that the Grexit became a term widely used and more likely to happen.
The deterioration of the Greek economy can only mean that the country is in its way to bankruptcy
European Central Bank governing council member Christian Noyer has made it clear in his statement to Reuters that the Grexit is not a problem for the Euro zone contradicting what Tsipras has said about the Grexit being the Beginning of the end of the Euro Zone.
Syriza’s support increases in Greece due to the fact that Tsipras has refused and fought the cuts in the number public servants and pensions, yet decreased amongst the EU leaders as they consider that Greece has failed to comply with the measures. The deterioration of the Greek economy can only mean that the country is in its way to bankruptcy. This brings us back to Cyprus in 2013 and the threats made by the ECB to stop the funding of banks unless they complied with the EuroGroup measure which ended up in a bank deposit levy affecting of all accounts over 100,000 Euro.
Will history repeat itself within the EU? And If Syriza fails, does Greece have an alternative but the Grexit and bankruptcy? Questions that remain to be seen by the end of this month.