The nightmare scenario for EU leaders gathered for Thursday’s crucial summit in Brussels, is not the deadlock between North and South over a road map towards “genuine” fiscal and banking union backed by some form of Eurobonds, which Berlin vehemently rejects.
The real horror, according to Wednesday’s article by Reuters is a possible failure of the next Spanish bond auction that would prompt “solvency worries to Italy and beyond” and trigger “uncontrollable bank runs that spell the single currency’s end”.
In this context, Athens is virtually frozen out of the heated debates in Brussels after last week’s decision by Eurogroup finance ministers to freeze fund disbursement under the country’s second bailout programme until the next inspection and audit of the government’s performance has been completed by the troika.
But according to a German government source quoted by Reuters on Thursday, “the troika inspection is likely to take weeks rather than days”.
The German source also said Chancellor Angela Merkel had spoken “intensively” but inconclusively with French President Francois Hollande on Wednesday evening in Paris implying that the North-South rift remains deeper than ever.
This leaves President Karolos Papoulias little room for manoeuvre as he represents the ailing Prime Minister Antonis Samaras at the tense EU summit conference hall.
Papoulias will deliver a letter by Samaras to his EU counterparts pleading for some breathing space of bailout finance for bank recapitalisation and domestic state debt settlements to halt the country’s economic collapse from the dramatic cash squeeze.
Samaras noted that part of this “breathing space” would be the revision of the harsher terms imposed by the troika and the extension of the fiscal adjustment period for two more years after 2014.
But Samaras has again failed to appeal for EU solidarity as Greece faces a state of economic emergency and a veritable humanitarian crisis as a result of the troika’s difficult austerity prescriptions.
Source: Athens News