A blog by the Greek finance minister has revealed the gulf that lies between that has split the Eurozone and may yet lead to the Athens government defaulting on a bail-out deal.
Yanis Varoufakis argues that the 240 billion euro bail-out was due to reckless banks and financial institutions doling money out to the government and then shifting the debt off their books.
As a result, Greece is the fall-guy and not the villain of the piece, he explains.
His point is the government should not have borrowed the money and would not have been able to do so if mainly German banks had not made accessing the cash so easy.
Now, ordinary Greeks are suffering from austerity measures to pay for something that was essentially not their fault.
What the Greeks say
Varoufakis’ argument is difficult to deny as he analyses the bail-out –
- The bailout was not a new loan to Greece to help fund a new start but a refinance of existing loans to private banks. Varoufakis discloses that 90% of the cash went to these banks and not to the Greek government
- The Greek economy was always too weak to repay the borrowing, and a responsible lender should not have advanced the money
- The scenario would always mean the Greek debt mountain would draw in other Eurozone nations as repaying the debt was unaffordable
- The circumstances of the Greek bailout have made Eurozone nations suspicious of each other and whether they are working for the community or themselves
Now the Greek prime minister, Alexis Tsipras has privately written to German Chancellor Angela Merkel asking for financial aid.
The letter has been leaked, but highlights the desperate plight of the Greek nation and the gulf in how Greece and Germany interpreted the bailout terms and conditions.
As with all decisions in the Eurozone, time seems to move slower and everyone has to go through a dance of bluff and counterbluff before reaching agreement.
Tspiras says Greece is about to run out of money unless the European Central Bank steps in with more credit.
Behind his plea is the inference that a Greek default on the bailout repayments is on the way.
That’s not the same as leaving the Eurozone, but whether the other nations would expel Greece or allow a precedent for the other nations struggling with their bailout repayments is another conundrum.
However, governments in Portugal, Italy, Irelands and Spain will be watching how the story unfolds with interest.