European finance ministers are expected to decide on Greece’s continued membership of the euro currency during a two-day meeting in Cyprus from 14 September.
The country’s fate will be based on a crucial report on the implementation of its bailout agreement by the ‘troika’ of the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Commission that supervises its austerity measures.
A negative report means that Greece cannot access the bailout funds from the troika. But recent reports already show that the country is currently struggling to deliver on the agreed reforms, including privatisation and the slashing of civil service jobs among €11.5bn of spending cuts between now and 2014 as demanded by its international lenders if it is to continue receiving instalments of the €130bn bailout.
Efforts by Greek Prime Minister Antonis Samaras to extend the cuts till 2016 have met opposition from both German Chancellor Angela Merkel and French President François Hollande.
During his recent trip to Germany and France to seek support for his government’s latest plan, Prime Minister Samaras was reportedly told by the two leaders to stick to the bailout agreement.
“We’ve been facing this question for two-and-a-half years, there’s no time to lose, there are commitments to reaffirm on both sides, decisions to take, and the sooner the better,” said President Hollande, adding that European finance ministers would decide on the Greek request in early October.
Observers say it is extremely difficult to see how Greece can remain in the eurozone without the strong support of Germany and France as well as Finland, which has recently become a major player in the eurozone economy.
Meanwhile, a strong ally of Chancellor Merkel has stated that he sees “no way round” for Greece to remain in the eurozone.
Christian Social Union leader Alexander Dobrindt has predicted that Greece will leave the eurozone in 2013.
It has also emerged that Germany’s finance ministry is examining the effects of Greece leaving the single European currency.
The Financial Times Deutschland recently reportedly that “a secret cell” has been established in the ministry to calculate “the financial consequences” and consider “how to prevent a domino effect onto other eurozone countries” if Greece exits.
Although German leaders were quick to deny the report, Finnish people have repeatedly made no secret of their preparation for a break-up of the eurozone.
In a recent poll on the issue, a majority of Finns said they were unwilling to continue to help bailout Greece and other struggling EU states as this is strongly affecting the Finnish economy.
Their views have been echoed by the leader of the populist far right True Finns party. “There are no rules on how to leave the euro but it is only a matter of time,” Timo Soini told the UK’s Daily Telegraph. “Either the south or the north will break away because this currency straitjacket is causing misery for millions and destroying Europe’s future.”
He added: “It is a total catastrophe. We are going to run out of money the way we are going. But nobody in Europe wants to be the first to get out of the euro and take all the blame.”
