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17/06 – Greece: Both sides dig in

Fears that the Greek financial crisis will culminate in debt default and exit from the euro intensified last night as Athens hardened its rhetoric against its creditors and insisted it would miss a payment to the International Monetary Fund unless it received debt relief. In a tone of alarm, all Greek media extensively report on what they describe as a “war climate” between Greece and its creditors.

Addressing the Greek parliament and commenting on the “harsh reform proposals” of the IMF, Mr Tsipras said the IMF and the ECB are trying to strangle Greece’s economy, and urged the EU not to back the IMF plan. EC President Juncker replied by attacking Mr Tsipras and blaming him for not telling the truth.

According to Süddeutsche Zeitung information reported by Világgazdaság, if the Finance Ministers do not reach an agreement on Thursday, the leaders of the member states will meet again in Brussels on Friday. Some sources such as suggest that European leaders are thinking about an emergency summit to be held on Sunday if an agreement is not signed at the Eurogroup meeting. But Diário Económico reports that the last opportunity for a solution is likely the European Council at the end of the month, as the European Council President has denied summoning an extraordinary council meeting for the weekend.

By saying that it will not present a new list of reforms at the next Eurogroup meeting tomorrow, Athens is actually seeking to corner its creditors into a political agreement in the European Council meeting on 25 and 26 June, Le Monde comments. Greece’s creditors however believe the date of 25-26 June to be too late to reach an agreement, and are now considering Greece’s payment default as an acceptable outcome, Le Monde highlights.

The EU seems to be mentally preparing for a Grexit, Mathis Feldhoff writes on Greece could be forced to implement capital controls to prevent serial bank bankruptcies, as Cyprus did in 2013, and would probably end in a change of government. Should Greece’s bailout talks break down for good and should the country fail to make a crucial debt repayment, then European authorities would sever their life support to Greece’s banking sector, forcing the country to take drastic steps to stem an exodus of capital, the International New York Times says. EC Vice-President Valdis Dombrovskis added fuel to the fire, when he said publicly that Euro Working Group also discussed the consequences of unfavourable scenarios, ANT 1 reports.


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