Are the Troika and Germany seeking a smaller Eurozone?
Nigel Green (pictured), founder and chief executive of deVere Group argues that the Troika, with support from the German government, could be trying to force Greece out of the Euro.
Following the Eurozone finance ministers last night rejection of a Greek government call to extend its bailout, which led to Greece missing its €1.6bn payment to the International Monetary Fund (IMF) in the early hours of Wednesday morning, the question can be raised whether the Eurogroup wants to force Greece out of the Euro.
This stance has serious implications for Britain, as Prime Minister David Cameron tries to renegotiate its place within Europe.
Last night, the Eurogroup rejected a last-minute appeal by Greece, describing it as ‘crazy’ to extend the bailout.
As such, Greece has missed a payment to the IMF. However, according to the IMF’s own rules there should be a grace period of one month before a government is said to have ‘defaulted.’
This was certainly the case in 2003 when the Argentinian government missed a payment to the IMF, but then managed to resolve the situation thanks to a fresh loan. The IMF would need to break its own rules to declare now that Greece has defaulted.
Previously, on Sunday, Greece came closer to a financial meltdown than it has since the current crisis began when the ECB effectively shut down the Greek banking system as it decided to restrict credit to the country. There was no standout motivation to take this decision at that time.
It could be reasonably argued that there is growing evidence to suggest that there is a campaign to drive Greece out of the Eurozone. Much of this, it could be said, is being driven by Angela Merkel’s German government, which it would seem is seeking to hold Greece up as an example to other peripheral Eurozone member states.
The firm message coming from Merkel, who has keen and intuitive sense of the public mood in Germany, appears to be that to remain in the Eurozone, countries must come into line, accept all the terms and conditions, or face the consequences.
There are a growing number of voices arguing that a Grexit could, ultimately, be a positive and logical next step, and that the possibility of a smaller Eurozone made up of fewer, more stable member states is indeed preferable – and that perhaps this is actively being sought. Is this the Troika’s and Germany’s strategy with Greece?
The firm, non-blinking, now non-negotiable stance being taken by Germany and the European authorities in relation to Greece should set off alarm bells for Prime Minister David Cameron who is seeking a new deal in Europe to keep Britain as a member.