There has been a veritable windfall of information coming out of Greece over the past few days. The second major European bailout of Greece expired last week as Athens missed a major payment to the International Monetary Fund. In addition to the payment default, Greek voters over the weekend voted "No" on a referendum on terms of a continued Eurozone bailout.
On Monday, it was announced that Greek Finance Minister Yani Varoufakis was stepping down amid the turmoil and uncertainty surrounding the future of the Greek economy. In a blog post on his personal blog site, yanivaroufakis.eu, the former Finance Minister stated, " I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings".
Varoufakis his suggested absence was "an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today."
Now, the eurozone in general and Athens in particular are in a state of limbo, and an easy solution to the problem is nonexistent. And as the BBC reported earlier, “German Chancellor Angela Merkel and her French counterpart Francois Hollande also called on Greece to make ‘serious’ proposals.”
Here are the objective facts about the Greek financial issues: Greece owes €330 billion to its international creditors. 60% of the debt is owed directly to other eurozone nations, and Germany is its biggest creditor. The rest is owed to the International Monetary Fund (IMF, who could not be reached for comment), the European Central Bank, and a combination of domestic and foreign banks (including several in the United States). Even the most optimistic projections state that it will takes Athens several decades to pay it off.
Many in the eurozone are divided over what to do next. The Germans are especially divided over their course of action, considering the billions the Greek government owes them. Many of them see the Greeks as a liability who need to leave the eurozone. One editorial in a Frankfurt newspaper reads, “[Greek PM Alexis] Tsipras and his government have promised their voters the impossible. The people of Greece deserved better.” Another in Der Spiegel lashes out at Chancellor Merkel, stating she “… relishes her reputation as queen of Europe. But she hasn't learned how to use her power, instead allowing a bad situation to heat up to the boiling point.”
In response to German media outlash, the German government is aiming for a more conciliatory position. Merkel’s spokesman, Steffen Seibert, told reporters on Monday that it was up to Greece to put forward their proposals to stay in the eurozone. Same goes for France, where Finance Minister Michel Sapin noted, “Dialogue remains possible. With all respect to the outcome of the vote, it's up to the Greek prime minister to come up with proposals.”
The United States government meanwhile, though not a Greek creditor, has made it clear it favors whatever leads to financial stability. This is confirmed by the White House’s statement that “The creditors who are sitting around the table recognise that it is in their interest for Greece to be back on a path of economic growth but it is also important for Greece to implement the kinds of reforms and to keep the commitments they have made previously,”
The Treasury Department also weighed in noting that Secretary Jack Lew “emphasized that the United States looks forward to all parties – including Greece, Europe and its institutions, and the IMF – resuming their conversations toward a constructive outcome that will allow Greece to make difficult but necessary fiscal and structural reforms, return to growth, and achieve debt sustainability within the Eurozone.”
For now, it seems the world will have to hold its breath and see where the results of the ongoing negotiations ultimately lead.