The Greek debt saga continues and financial tragedy seems increasingly likely as the deadlock between Greece and the Eurogroup continues today.
The two sides remain far apart during the Eurogroup meeting in Brussels. The 240 billion euro bank bailout expires at the end of this month and Greece could run out of money by the end of March without new external funds, driving it nearer to the euro zone exit.
There is already quite a lot of chatter about the possibility of another summit should today’s talks end in stalemate.
It has dragged along for so long now that a false sense of security has developed as the situation becomes the “new normal.”
This complacency is unwarranted. The situation will come to a head sooner rather than later.
There are new reports of bank runs in Greece coming into this Bank Holiday weekend. Officials in the Greek banking sector told Greek newspapers that as much as 25 billion euros have been withdrawn from Greek banks since the end of December with outflows surging this week ahead of a bank holiday.
Bank runs continue as Greek depositors rightfully fret regarding bail-ins or a return to the drachma. The prudent money is diversifying their savings so as not to be financially decimated.
Greece officially applied for a six month extension to its loan agreement, Eurogroup chair Jeroen Dijsselbloem said on Twitter of all places yesterday. U.S. Treasury Secretary Jacob J. Lew contacted Greek Finance Minister Yanis Varoufakis yesterday and warned him that failure to strike a compromise would bring further hardship on the country.
Either Greece will acquiesce to EU demands and eventually default anyway, or Greece will exit the Euro and unilaterally default causing unforeseeable consequences or Europe will cave-in which will embolden the anti odious debt factions across the European periphery.
Greece may even avail of a bail-out from the BRICS bank which would bring further geopolitical instability to Europe and further undermine the dollar system.
The final outcome of the Greek crisis is far from certain and there are no solutions presented so far which will not cause instability for the euro and the possible end of the ‘single’ currency.
Regional War in Eastern Europe Averted for the Moment
Meanwhile, the Franco-German peace initiative of Francois Hollande and Angela Merkel forUkraine appears to be bearing fruit, though the process is still very fragile.
The landmark Minsk agreement saw France and Germany, Europe’s de facto leadership, negotiate a foreign policy independent of it’s heavy-weight NATO allies – the U.S. and Britain.
It was apparently catalysed by John Kerry’s suggestion that the U.S. would begin arming the Kiev government in its war on the separatist regions of Luhansk and Donetsk.
Such a move would have caused a reciprocal response from Russia, who insist that, to date, they have not armed the separatist groups. Foreign minister Lavrov has consistently asked Washington to back up their accusations to the contrary with evidence. No evidence has been presented.
Should Ukraine’s civil war escalate into a proxy war between Washington and Moscow it would destabilise Eastern and central Europe and possibly suck Europe uncontrollably into full scale conflict with Russia.
This is a frightening vista for all right thinking people. It would lead to a renewal of old rivalries and bitterness surfacing within former Eastern block nations and the Balkans.
The recent capture of Debaltseve is being touted as a dishonourable violation of the ceasefire agreement by Putin. It must be remembered that the separatists were not party to the Minsk agreement.
While they are consistently referred to as “pro-Russian” it is worth recalling that when they voted to secede from Ukraine they voted for independence, unlike the people of Crimea who voted to join Russia. They are predominantly ethnic Russians and wish to maintain close relations with Russia but this does not necessarily mean that Putin speaks for them.
As the Minsk talks began the separatists had already surrounded Debalseve and it’s capture was more or less a foregone conclusion. Debaltseve is an extremely important strategic target, a rail hub connecting the Luhansk and Donetsk regions. As such, from the separatist point of view it could not be left under Kiev’s control.