Greece at the Point of no Return

“The European Union is suffering under Germany,” Georgios Karatzaferis said on Friday. He is the president of the right-wing LAOS. With 15 members in parliament, the party is a minority partner in the coalition cabinet of party-less technocrat Prime Minister Lucas Papademos. Karatzaferis accused German Chancellor Angela Merkel of trying to “impose her will on Southern Europeans.” He called the Netherlands, Austria, Finland, and Luxembourg “satellite states” of Germany. And he said that the center of the EU was no longer in Brussels but in Berlin.

But the true toxin in his outburst was the phrase: “I cannot accept this credit agreement.” With it, he backtracked on his support for the austerity package agreed to amid flickers of hope the day before. And it pushed Greece a step closer to disorderly default and bankruptcy.

To avoid that fate, Greece must make a €14.5 billion bond payment on March 20, but it won’t be able to unless it receives the next bailout payment, this one for €130 billion, a mind-boggling 56% of Greece’s shriveling GDP. That payment process has to be initiated over the next few days, according to ratings agency Fitch, to give all countries and institutions involved sufficient time to deal with the administrative complexities of bailing out a country with taxpayer money.

On Thursday, for a few minutes at least, hope was flying high in the media: the three governing parties had agreed on an austerity package that included cutting the minimum wage by 22% and trimming the bloated public sector. But the fallout was immediate.

Deputy Labor and Social Security Minister Yiannis Koutsoukos, a member of the socialist PASOK, resigned in protest over the cuts in social programs; he hadn’t been informed about them, nor had anyone asked him, he said.

Unions called for protests and a general strike for Friday and Saturday. The measures throw the unemployed, retirees, and young people into misery, said Ilias Iliopoulos, head of the union for civil servants. “We will not accept that, there will be a social revolt.”

Greece’s Police union threatened Troika inspectors with arrest. In a written declaration sent to representatives of the Troika, the union accused them of trying to overthrow democratic order in Greece, injuring national sovereignty, and robbing the Greek people of important goods.

The small tabloid Dimokratia featured Merkel in Nazi uniform ( The headline, “Memorandum Macht Frei,” evoked the infamous text above the entrance of the Auschwitz concentration camp. And demonstrators burned a German flag in front of the parliament.

Friday, public transportation came to a halt in Athens. Leaflets were handed out with Wanted printed on them, offering a reward of €1 euro for the arrest of a “Troikan.” Peaceful demonstrations were followed by violent ones where demonstrators threw Molotov cocktails and rocks at police, who responded with teargas and clubs. More ministers offered their resignation. And on Saturday, the Prime Minister warned of collapse if parliament failed to agree on the austerity package.

As the situation veers toward hopeless, it follows the step-by-step procedure laid out by Otmar Issing, former member of the Executive Board of the Bundesbank and of the Governing Council of the ECB—a procedure that has been happening for months.

The Troika hasn’t always played hardball. For two years, it sent billions of euros to Greece to keep it afloat for a month or two at a time—though Greece had systematically misrepresented its deficits and debt since before it acceded to the Eurozone. In return for the bailout billions, the Troika asked for reforms. The Greek government promised them but failed to implement many of them. Politicians, ministries, and agencies refused to go along. The Greek people took to the streets. The bailout billions went up in smoke. The economy got worse. And Greece’s refusal to wholeheartedly embrace these reforms exceeded Teutonic patience and willingness to throw ever more money their way.

So the Troika is letting Greece twist in the wind. At risk are €130 billion—many times larger than the smallish amounts with which it had been spoon-feeding Greece. If the payment were €5 billion, it would be made, if only to delay the inevitable another month. But €130 billion, 56% of Greece’s GDP, won’t happen unless all conditions down to the last iota are met, humiliating to Greece as these iotas may be.

And it seems the bailout Troika decided to let the inevitable happen. Their impossible-to-fulfill conditions give them plausible deniability. They can say “afterwards” that they tried everything, but that Greece simply couldn’t follow through. And Greek politicians are already planning for the “afterwards” as well.

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