Valdis Dombrovskis, Commission Vice-President for the Euro and Social Dialogue, admitted that EU leaders discussed what could happen if Greece failed to agree with its creditors and left the euro area. Greece’s creditors were in the meantime accused by Athens of trying to “humiliate” the country by wanting to impose tough austerity measures. The sharp criticism came from the Greek government despite the signals that Brussels is getting more and more used to the idea that Grexit could become a reality.
However, the recent failure to come up with an agreement that would be mutually satisfying was the clearest hint that Athens had no intentions of accepting its creditors’ demands. Greek Prime Minister Tsipras said that the requested pension cuts or tax hikes are politically motivated to hurt the poor and their true aim was to “humiliate not only the Greek government – this would be the least important – but humiliate an entire people”.
If the deal is not reached soon, another tranche of the bailout aid for the country will be frozen, which would force Athens to default on its debt within two weeks. The possibility of Greece leaving the euro area has started hunting financial markets, which were previously mostly oblivious to the developments regarding the Greek bailout program. European stock market logged its lowest since February and the risk premium on bonds of other “Eurozone troublemaker” countries was also affected.
Today (18 June), the Eurozone leaders will try for the last time to finalize a deal that would unlock more money for Greece. If they fail again, an emergency meeting might be held at the weekend. However, preparations for the eventuality of Greece leaving the Eurozone have already started. They reportedly include the creation of a system that would prevent a bank run and the collapse of the Greek financial sector.