Greece On A Slippery Slope

Angela Merkel has confirmed her commitment to the continued participation of Greece in the Euro project, but the German chancellor is starting to sound like a landlady whose lodger is behind with the rent, barely employable, and probably pinching her toothpaste. After nine days of trying to form a unity government, the only thing Greek politicians have agreed on, is that they don’t. Into this market-maddening maelstrom flies the newly inaugurated French President, and promptly gets struck by lightning.

 In Francois Hollande’s premier press conference with Mrs Merkel, the early exchanges were more abrupt than embracing. The Chancellor kicked off with the usual non-committal platitudes, concentrating on common ground not contrast. But Monsieur Hollande, maybe with an eye more to the domestic than the diplomatic, was keen to confirm that every option must be “on the table”. His hostess, one sensed, would have preferred that some subjects were brushed politely under it. With a second election looming in Greece, the French President was keen to reach out to its austerity-weary countrymen. “The Greeks need to know we’ll come with growth measures”, he said. The Chancellor, who might prefer that they just shut up and pay up, countered with: “The question is what one means by growth.” Not a full-blooded contradiction perhaps, but a pretty close cousin. If it had been a first date, there might not be a second, but these two don’t have the luxury of simply slating each other to mutual friends and avoiding each other at parties.

 When the Greek electorate go box-ticking again, on June 17th, the anti-austerity parties promise to prosper further. The result may be a battle of brinkmanship. Athens will attempt to alter the agreed austerity arrangements, aware that they may have over-stayed their welcome at a party they gate-crashed under false pretences, but the hosts don’t yet want them to leave. Whether the first socialist President of the Republic in almost two decades can convene sufficient policy compromise to encourage growth remains to be seen. Whether enough economic growth is even practically possible to service debt and still support public services is even less likely. Economists are now tottering towards the once taboo subject of a Greek exit from the single currency. Greece, in the Euro, is increasingly a sinking ship, with a choice between either accepting the bail-out, cuts included, or literally bailing-out.