After so many broken promises on reforms from Athens, some of its international lenders — those handing out the bailout money — are reportedly now thinking the unthinkable, that Greece maybe should leave the eurozone.
European Union partners and International Monetary Fund officials negotiating a second financial rescue for the eurozone’s most indebted state say they are tired of asking for the same measures to be agreed or implemented, again and again.
In a conference call last Saturday, euro area finance ministers vented exasperation at Greece’s failure to enact labour market and structural reforms to overhaul the economy.
“Enough is enough,” was they way one European official involved in the call described the message conveyed to Greek Finance Minister Evangelos Venizelos.
The lenders have largely lost faith in the country’s will to reform itself and are torn between imposing stricter outside control and cutting Athens loose.
Economists at Citibank have even come up with a name for Greece leaving the eurozone the ‘Grexit’ and they believe there is a fifty-fifty chance it will happen in the next year and a half.
But Greek analyst Costas Nakos with Piraeus Bank said that would be a disaster: “We’re looking at a very hazy picture, so I don’t know whether going back to the drachma would be a good thing or a bad thing. But if there’s no agreement, it’s a catastrophe for Greece. There’s no other option to remaining in the eurozone and persuading our eurozone partners that Greek debt is sustainable is a prerequisite to that.”
Nakos also said he does not see how the further austerity measures the troika’s proposing can help reach a solution.
And even the rating agency Standard and Poor’s on Wednesday criticised the eurozone’s “one sided” focus on austerity rather than growth.