EU officials revealed yesterday that they have held their first formal talks on the worst-case scenario for Greece, but the darkening outlook failed to fluster Prime Minister Alexis Tsipras, who holed up with his negotiators after proclaiming his optimism at an open air concert.
No one knows, least of all in Athens or Brussels, whether the anti-austerity government can reach a deal with its international lenders before an end-June deadline to avoid putting the country in grave danger of crashing out of the eurozone.
But senior European Union officials are taking no chances, and have discussed a series of scenarios, several officials said yesterday. These included a potential Greek default on a €1.6 billion payment to the International Monetary Fund, the global lender of last resort, at the end of this month, they said.
While Europe let loose a barrage of warnings, the leftist Greek government exuded calm and optimism. A cheerful Tsipras was mobbed by supporters late on Thursday at an open air concert to celebrate the reopening of a TV station, still wearing the blue suit he had worn at crisis talks that morning in Brussels. His boisterous mood belied his tough talks with German Chancellor Angela Merkel and French President Francois Hollande on Wednesday, and European Commission President Jean-Claude Juncker on Thursday. Juncker jokingly called the meeting hall a “torture room”.
The failure to break a stalemate over a cash-for-reforms deal prompted the IMF to withdraw its team of experts. It also convinced EU officials holding scenario planning at a meeting in Bratislava to brace for the worst.
Government representatives, preparing next week’s Eurogroup meeting of eurozone finance ministers, concluded in the Slovak capital that there were three scenarios, and that the best of them, reaching a deal next week, was now the least likely.
While Europe lets loose a barrage of warning, Greek government exudes calm and optimism
The second scenario was a further extension of Greece’s current bailout programme, which expires this month at the same time as Greece must repay €1.6 billion to the IMF.
The third – discussed formally for the first time at such a senior level in the EU – was to accept that Greece could default.
The meeting reached no decision or concrete conclusion, the officials said.
Most officials argued it was unlikely that creditors, which include the European Central Bank, would strike a deal on reforms with Athens in time to disburse €7.2 billion still available under a rescue programme extended in February for four months.
“It would require progress in a matter of days that has not been possible in weeks. The reaction of the ECB, the IMF and several member states was extremely sceptical,” one official at the discussions said.