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Will Greece Exit the Eurozone?

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Greece Exit the Eurozone

Will Greece Exit the Eurozone?

June 18 2015, 07.00am GMT


The burning question is whether or not this week will see the beginning of the unfolding of a Greek Tragedy, as day follows day with no evidence of a shift towards a settlement between Greece and its creditors.

Eurozone finance ministers hold a vitally important meeting on Greece today, which will also be attended by IMF (International Monetary Fund) managing director Christine Lagarde.

Time is running out quickly on the unlocking of 7.2 billion euros in bailout funds, part of which Greece needs to repay the 1.6 billion euros loan repayment due to the IMF by 30 June.

Spyros Economides, an associate professor in international relations and European politics told CBS MoneyWatch in an email that the Greek government is not being flexible in any manner and they are standing their ground without compromise. According to the professor, this is a very dangerous approach and it is also causing European partners to be alienated. He went on to explain that if no agreement is reached by early next week, then “no agreement will be reached at all”.

Meanwhile, the Prime Minister of Greece, Alexis Tsipras, has the Greek public opinion solidly behind him and he is clearly in no mood to compromise.

The caveat is that the same supportive public is responsible for the highest shortfall in tax revenue among industrialized nations, according to the Organization for Economic Cooperation and Development. The tax shortfall is in a large measure a cause of the Greek financial crisis and Tsipras and Syriza, the political party he leads, pledged to negotiate a write-down of Greece’s debt, ease austerity, boost aid to low income pensioners, increase the minimum wage and end the privatization of State assets.

These pledges fly in the face of the demands of the IMF and the other eurozone states who have an approach to the crisis that is diametrically opposed to the pledges made by Syriza. All this places Alexi Tsipras between a rock and a hard place as his electorate insists on no compromise, while the Greek creditors are demanding reforms to free the funds on offer.

Another factor stalling the negotiations is the anti-capitalist platform of Syriza which mistakenly insists that the European Community, the IMF and the European Central Bank are to blame for Greece’s problems. Prime Minister Tsipras possibly also believes that the threat of Greece moving into the Russian sphere of influence will have a tempering effect on the demands of the European Union member states.

The final word from the Governor of the Greek central bank, Yannis Stournaras, said on Wednesday that his country was on the brink of an “uncontrollable crisis” and that failure to reach a deal would  “lead initially to a Greek default and ultimately to the country’s exit from the eurozone” and - most likely - from the European Union.

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