Europe holds its breath as Greek deadline looms

June 30, 2015 is the deadline for Greece to repay Euro 1.6 billion to the International Monetary Fund and the chance of Greece defaulting is very real, Professor Schumacher says.

“Greece hasn’t got the money so it needs access to the final Euro 7.2 billion instalment of the EU bailout fund. The EU, however, won’t release these funds until Greece agrees to significant reforms.

“Negotiations between Greece and its creditors have gone from bad to good and back to bad. At the moment it seems unlikely that the parties will reach an agreement. Why? Because the EU and IMF insist on strict reforms and the Greek Prime Minister won’t agree to the proposed reform plans as he campaigned on the promise of an end of austerity.

“Greek Prime Minister Alexis Tsipras and his finance minister Yanis Varoufakis have been playing a dangerous game. They believe Greece is too big to fail and have been blocking reform suggestions. I hope they are not over-playing their hand. The EU has already indicated that a Greek default will not be the end of the Eurozone or EU.”

If Greece continues to reject reform measures, the EU is unlikely to bail them out, Professor Schumacher says.

“Greece would have to declare bankruptcy. From an economic perspective this might actually not be the worst outcome. Greece gets a chance to start again – but on its own – and the EU could finally move on and stop spending billions on bailing out a country that does not want to reform.

“From a political and humanitarian perspective, however, a Greek default would be a tragedy.”

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