By Polina Chernitsa and Alexandra Dibizheva
The attempt at forming a new government in Greece has failed. The Tuesday round of consultations has yielded no results. The country’s president has declared that Greece will have to elect a new parliament again. These developments actually spell the death of Athens fulfilling the anti-crisis plan, analysts sum up.
The crisis has been continuing since the 6th of May, the opponents of the austerity policy cannot come to an agreement with the pro-European parties. The country is facing early elections. On Wednesday Greek President Karolos Papoulias is due to announce the composition of the ‘functioning’ government which will control the country before new elections. These developments actually spell the death of Athens’ fulfilling the anti-crisis plan, experts sum up. In this context, the Euro Group has confirmed that it will not allow Greece to leave the eurozone.
Cutting the state expenditure stipulated by the anti-crisis plan is to be approved by the Greek government by the end of June. This is the main condition of the EU, the European Central Bank and the IMF for granting Greece the next installment of the loan. Instead of this, creditors will most likely have to watch new elections in Greece, after the previous ones held on the 6th of May. The leading parties have failed to form a government. The stumbling block is the issue of budget cuts. In this context, the world media are discussing Greece’s forthcoming withdrawal from the eurozone. The estimated dates are from a month to a year, creditors’ losses are up to 400bn euros and forecasts are that Greece’s GDP will shrink by 20%.
The session of the eurozone ministers of finance was to give an answer to all these questions. In the end, the head of the Euro Group Jean-Claude Juncker urged everyone “to respect democracy in Greece” and labelled as “nonsense” all talk about Athens withdrawing from the eurozone. Some analysts consider this declaration ‘a good sign’. Others, like Russian economist Igor Nilolayev, consider it irresponsible.
“This decision means that the authorities have started to panic. We return to the fact that Greece has no money to pay its debts. It is obvious that Greece will not remain in the eurozone. Moreover, now it is time to think about the future of the eurozone itself. This situation is over two years old. They do not have an adequate understanding of the situation, they cannot analyze the reasons why the rescue measures do not yield positive results. Investors have lost all hope. This is sheer perplexity.”
Nobel prizewinner, economist Paul Krugman also speaks about panic. However, in his opinion, panic will rise exactly after Greece’s expulsion which will take place this summer. If this decision is taken, the consequences will be less disastrous than the predicted losses, financier Yevgeny Nadorshin believes.
“It will certainly come as a shock. However, for most eurozone countries and financial institutions this could be a relief. In recent years, the Greek factor created substantial complications, it demanded quick responses which neither Greeks nor their eurozone partners could offer. The package of hastily made decisions has not brought any good results, in spite of the fact that most decisions were made with the best of intentions.”
This package stipulates tougher budget discipline for EU member-states, up to the expulsion of offenders. The new French President, Socialist Francois Hollande has already declared that he would ask his EU partners to change the package laying emphasis on “stimulating the economy”, rather than using draconian measures. These developments are another evidence that the European authorities are not prepared for resolute action in the struggle against the crisis.