Is this the End?

Should I have been wrong? Until this morning I was pretty confident that the Greek government and the finance ministers of the Eurozone will reach a face-keeping compromise at their meeting on Monday. I even took the extremely arrogant uttering of German Finance Minister Schäuble as well as of his Austrian colleague Schelling  who more or less declared the Greek government as irresponsible and misguided collection of individuals as party of the game of chicken. Later on Monday I learned that the Eurozone ministers are not a bit willing to compromise. According to rumours it was the Dutch Dijselbloem who currently heads the Euro-Group who presented a negotiation paper  that asks for a “technical extension” of the current program for six months during which the Greek government should implement overdue reforms to fight capital flight and corruption and at he same time should declare that it will fulfill all financial commitments towards the creditors. The paper obviously did not indicate any willingness to negotiate at lest one or two of the core suggestions of Greece.

Was this the end? Not in a technical sense. There are still a few days to come up with a compromise. Time is an issue though, not least because national parliaments may need to ratify a new agreements, and this needs time – latter is a scarce resource for Greece as it needs to make payments to its creditors, and this will be only possible if Greece is getting new money. Who will give in? At this point I think not the Euro-Group. In the last few days we could observe a closing of ranks. It is no longer only the creditor camp that demands obedience but also the other debtor governments who are disgusted by Greek demands. It seems that the Greek charm offensive is not paying off. Giving in would be political suicide for Syriza. The best option is to sink with flying flags. This at least would potentially allow them to deal with the train wrack in Greece and to develop a recovery path outside the Eurozone. This will be messy, for Greece and potentially also for the EU. But the probability for such a scenario is now above 50%.