- - Thursday, June 4, 2015


If this is Friday in Athens, there must be another deadline. The Greek government is supposed to redeem more loans from the International Monetary Fund. In theory, Athens should be able to sell bonds and come up with the cash. But the European Central Bank, acting as the sheriff for members of the euro monetary union, won’t issue the bonds until Prime Minister Alexis Tsipras agrees to a new round of austerity measures. Even at astronomical rates of interest, the private banks aren’t interested in buying the bonds.

Mr. Tsipras‘ bitter opposition to the European Central Bank’s demands is what elected him and his grumpy left-wing coalition partners in January. Mr. Tsipras argues that even if he accepts what his eurozone creditors demand he would have to call new elections or a referendum on another round of austerity.

The list of Greek economic ailments — from notorious tax-dodging by the ordinary citizen, inordinate taxes, an unbelievably bloated government bureaucracy, generous labor laws it can’t afford, a run by capital for the exits — is a long one. If the new demands for cleaning up the mess are too stringent, they would impede growth and make it impossible for the Greeks to pay their debts. Until now there have been differences among Greece’s creditors about just what they want the Athens government to do.

The IMF has been calling for Greece’s creditors to be tough, especially the Germans, and they have the place at the head of the line of the lenders. But if the gossip — and it changes every 24 hours or so — is indicative, Germany and the IMF have compromised their differences and are ready to give the Greeks a package of “measured” reform and aid. But it comes with an ultimatum, although no one wants to call it that.

Mr. Tsipras has an ace not far up his sleeve. That would be to make good on his repeated threats to take Greece out of the euro and return to its own currency. Nobody really knows what that means, even if he could summon the will to do it. The fantasists who put together a monetary union, now 19 of the 28 states in the Union, made rules for entry, often, as with Greece, bending the rules. But there is no door marked exit, and Greece’s departure would threaten the Brussels’ bureaucrats who, contrary to common sense, created the common currency with no prescribed common fiscal and monetary policy. The chairman of the weak European Central Bank has spent most of his time wringing his hands.

If the Greeks were really to go, this would set a precedent, and several other members of the eurozone are not in much better shape. Unemployment in southern Italy, the EU’s fourth-largest economy, is worse than in Greece. The European Union can hardly afford a Greek chorus singing in the background. Reality seems about to call the bluff on both sides.

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