Setting a Deadline for Greece Proves Much Easier Than Sealing a Fate

By ANDREW HIGGINSJULY 8, 2015

The New York Times

BRUSSELS — After five years of crises, conflicts and deadlines that have come and gone without resolution, Greece and the European countries that have been propping it up financially have come to what they all insist is a final reckoning, with just days to decide whether Greece stays in the euro system or is cast out.

Trouble is, no one seems inclined to be the decider.

With so much at stake for Europe’s long push for deeper integration and the welfare of the Greek people — not to mention the political standing of the leaders involved — both sides have been sidestepping responsibility for the endgame, insisting that what comes next is up to the other.

“The ball is in Greece’s court,” Pierre Moscovici, the European Commission’s senior official for economic and financial affairs, said Wednesday, echoing a theme heard regularly in European capitals and the bureaucracies of Brussels as creditors demand evidence that Greece is willing to take concrete steps to get its finances in order.

But Prime Minister Alexis Tsipras of Greece said the situation was a European problem, in need of a European solution.

“We all understand that this debate is not exclusively about one country. It’s about the future of our common construction, the eurozone and Europe,” he said Wednesday, making his case that the only way out is for the other euro-linked countries to drop their insistence on painful austerity policies.

Nearly everyone involved faces a mix of domestic political constraints, European and global responsibilities, ideological differences and a deep distrust built up over months of fruitless and often ill-tempered negotiations since Mr. Tsipras and his radical party, Syriza, took power in Greece in January. Seeing no benefit yet to getting out in front on an issue with historic implications, no one of stature has stepped up to say definitively that Greece must go. Equally, no one with clout has stepped in to stop the forces — notably Greece’s steady drift into bankruptcy — that could compel it to leave.

Greek banks have all been shut since June 29. The country has joined a roster of failing states like Zimbabwe and Sudan and defaulted on loans from the International Monetary Fund. A.T.M.s, limited to dispensing just 60 euros a day per person, are fast running out of cash, raising the prospect that Greece may soon start issuing I.O.U.s, effectively creating an unofficial second currency to keep the wheels of business turning.

Whether this situation improves or gets even much worse is in the hands of the European Central Bank, which has the power to increase or cease an already-capped flow of emergency cash to Greek banks.

Without this, Greece would almost certainly have to resort to form sort of scrip that could end up as a new national currency.

Chancellor Angela Merkel of Germany is trapped between her desire to hold Europe together and intense domestic pressures not to make any concessions to the Greeks over funding.

The top officials of European institutions in Brussels are loath to set a bad precedent by giving in to Greece’s call for softer terms on new bailout money.

But they are equally concerned that a decisive break would have grave consequences for the European experiment in shared sovereignty, at a time when Britain is weighing its own departure from the European Union.

Mr. Tsipras himself has insisted he wants to avoid a “rupture” with Europe and its currency union but heads a fractious radical party whose powerful left flank, emboldened by a referendum last Sunday rejecting creditors’ earlier terms, demanded on Wednesday that Greece stand firm even if that means issuing its own currency.

And nobody seems to really know whether it is possible, at least legally, to expel Greece from a monetary club it joined in 2001, or if Greece can quit of its own accord, a situation that once prompted a prominent British politician and onetime foreign secretary William Hague, to call the euro a “burning building with no exits.”

All major European leaders, however, now agree that they have reached a crunch point. It’s a crucial juncture that Margaret Thatcher, denouncing what she regarded as a doomed monetary project more than 25 years ago, predicted would inevitably come, but that even zealous supporters of the project now see as just four days away.

“Tonight I have to say it loud and clear — the final deadline ends this week,” Donald Tusk, the president of the European Council, declared late Tuesday after another day of result-free talks in Brussels on how to save Greece from economic collapse and ensure that it stays with the euro.

Kathimerini, a leading Greek newspaper, splashed the stark choice facing Greece and all of Europe across its front page Wednesday: “Euro or Drachma on Sunday?”

Sunday is when the leaders of all 28 European Union countries have been called to Brussels for one last attempt to resolve a Greek debt crisis that has pushed Germany’s ever-cautious leader, Ms. Merkel, France’s beleaguered president, François Hollande, and an entire political system that thrives on muddle and compromise toward a painfully bald and difficult decision.

Even the European Commission, the guardian of an elaborate architecture of treaties that commit Europe to “ever-closer union,” now acknowledges that its technocrats have prepared in detail for a possible “Grexit scenario,” something that had previously been taboo.

Like Europe’s entire push for integration, begun amid the rubble of World War II as an attempt to banish the nationalist demons that had brought such ruin, its common currency has always been driven by political will rather than economic imperative.

About the only people openly calling for a Greek exit are anti-European populist firebrands like Nigel Farage of the U.K. Independence Party, which cheers Europe’s agonies of indecision as evidence that the whole project is doomed.

Among politicians actually in government, the few rare public voices in favor of Greek departure, or at least not entirely hostile to the notion, come from small states like Latvia, whose finance minister compares the monetary union to a malfunctioning machine that would perhaps be better off without “the element that doesn’t work.”

Mr. Tsipras faces crosscurrents at home. Some Syriza members, like Dimitrios Papadimoulis, of the European Parliament, say they want to end all talk of Greece leaving the euro. Speaking in Strasbourg on Wednesday, he pleaded with European leaders to “do whatever it takes to banish the word ‘Grexit’ from the vocabulary,” and asked them to “stop playing with matches in a warehouse full of fuel.”

Then there is the Left Platform, a radical group of Syriza deputies in Athens whose website recommended on Wednesday that Greece “”follow the great ‘no’ of the referendum to the very end.” Greece, said this group, must stand up to German calls for tight spending even though a German refusal to budge on its demands for budget cuts in return for bailout money would “push Greece in the direction of a national currency.”

Germany, Europe’s biggest economy and de facto leader, is trying to maintain a united front with France, which along with the United States has been pressing for a deal to hold the euro together.

But at home, Ms. Merkel, who has for years asserted that defending the currency union is Germany’s “historic task,” is confronting growing resistance to further bailouts for Greece. If Germany agrees to a third bailout, conservatives in her center-right bloc will feel their principles are “more than betrayed,” said Peter Ramsauer, chairman of the economics committee in the Bundestag and an influential member of the Bavarian Christian Social Union, sister party to Ms. Merkel’s Christian Democrats.

But it is not clear that there is a legal mechanism for failure.

European law has no provisions that let members of the club that uses the euro, now numbering 19 nations, expel an unruly member, nor is there a procedure for a member to exit of its own accord, since the decision to join was supposed to be irrevocable.

Alison Smale contributed reporting from Berlin, and Liz Alderman and Niki Kitsantonis from Athens.