Originally published June 24 2015
Greece debt talks collapse and EU leaders prepare for state of emergency from runaway market panic
by J. D. Heyes
(NaturalNews) Debt talks to resolve Greece's ongoing financial crisis are going nowhere, and now the entire European Union is bracing for what it believes could be a financial emergency that will begin in Athens but potentially spread throughout the continent.
As reported by Reuters, Greek officials and creditors to the nation have drawn lines in their positions, diminishing hopes for a settlement that would avoid a default on billions of euros that the Mediterranean nation owes following a financial bailout a few years ago.
The stalled negotiations have prompted Germany's EU commissioner to declare that the time had come for a "state of emergency" after Left-wing Greek Prime Minister Alexis Tsipras ignored pleas from other European leaders to act quickly.
Instead, he put the blame on creditors whom he said were responsible for the breakdown in talks which have centered around a so-called cash for reform agenda, meaning Greek policies would have to be altered if any deal is to be reached extending credit terms. The present terms have proven to be the single biggest roadblock to unlocking additional aid.
'It has to do with democracy'
Tsipras has said his government had a responsibility to defend the nation's dignity and therefore would resist demands for additional pension cuts, which the country can no longer afford, given the dilapidated state of its economic infrastructure.
"It is not a matter of ideological stubbornness. It has to do with democracy," said the 40-year-old leftist, elected after vowing to end austerity, as quoted by Reuters.
At present, Athens has less than two weeks to find a way to end the disagreement; looming is a €1.6 billion repayment that is due the International Monetary Fund. The payment could leave Greece cashless and without any further ability to borrow, placing it in an economic abyss and "dangling on the edge of the currency area," Reuters reported.
Germany, along with other creditor nations, have demanded that the Greek government get past itself and offer sensible proposals to end the standoff.
"It won't work that Greece sets the terms and says 'everyone has to dance to our tune.' Greece needs to get back to reality," said Volker Kauder, parliamentary floor leader of Chancellor Angela Merkel's conservatives, in an interview with ARD television, Reuters reported.
The Belgian finance minister, Johan Van Overtveldt, noted that the EU's credibility would take a substantial hit and that radical elements in other nations would be emboldened if previous financial arrangements with Greece are not honored or are somehow changed.
Reuters further reported:
The European Commission said it would only resume mediation efforts if Greece put forward new proposals, while the Greek government spokesman said Athens was sticking to its rejection of wage and pension cuts and higher taxes on basic goods.
"We have largely exhausted our limits," spokesman Gabriel Sakellaridis said. Sakellaridis added that Tsipras' office said it was ready to rejoin talks as soon as possible but was currently on the lookout for any signal from lenders that that might lead to a breakthrough.
"If they call us with something new, we may also provide something new," said one unnamed Greek official to Reuters.
Other eurozone officials said the time was close when Greece would be offered a sort of "take it or leave it" option.
Meanwhile, nervous Greeks are ramping up withdrawals from the country's banks. According to Reuters, outflows totaled about €400 million ($449 million) on June 22 as the pace of daily withdrawals picked up from previous weeks.
Others have been critical of the entire Greek bailout process.
Daniel Altman, senior economic editor at Foreign Policy magazine and an adjunct professor at New York University's Stern School of Business, called the bailouts "stupid" in a recent column.
"Let's put aside the debate over whether rescuing Greece was a bad idea in the first place; a complete collapse of its economy might well have led to social unrest and even conflict," Altman wrote. "But how the Europeans and their cohorts at the International Monetary Fund (IMF) bailed out Greece was amazingly, insufferably stupid."
He believes that Greece's economic and political problems (too much corruption and the existence of a large shadow economy that doesn't pay taxes) require time to fix, and that a short-term demand to repay a poorly constructed loan is bad policy.
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