Greece’s membership in the eurozone is more uncertain than ever, after the inconclusive result of the election held on 6 May (see background), and the failure of pro-Adjustment Programme parties to form a coalition government.
To make matters worse, opinion polls in Greece show that the anti-bailout Coalition of the Radical Left (SYRIZA) could score a stunning victory in new elections scheduled for June 17.
SYRIZA has made clear that it does not intend to implement the memorandum of understanding between Greece and its emergency lenders. The coalition's leader, Alexis Tsipras, has announced that if the eurozone does not accept a renegotiation of the austerity measures, then he will call a referendum, effectively asking citizens if the country should scrap the European currency.
EU officials and governments alike insist that the implementation of the memorandum is a condition sine qua non for the financing of the Greek economy. If the bailout funds flow ceases, then battered Greek banks would collapse and, since no economy can survive without cash or credit, and Athens would need to introduce a new currency.
Government sources in Athens say Greece has enough cash at least until the end of June, while Greek banks are effectively dependent on support of the European Central Bank.
“We are ready to stand by Greece on its journey of reform. We want to stand by Greece. This being said, Greece must remain determined to reform,” Oli Rehn, European Commission vice president, said during a speech yesterday (22 May) at the European Parliament, echoing the ultimatum posed to Athens by the eurozone.
Diplomatic sources who asked not to be named said that “technical and legal” preparations have already begun, as the EU braces for the possibility of an anti-bailout government being formed in Greece.
Karel De Gucht, the EU trade commissioner, said in an interview published on 18 May, that such preparations have been made. According to a report by the Press Association, Christine Lagarde, who heads the International Monetary Fund, also said that if Greece fails to implement the Adjustment Programme, “the job of the IMF is to look at all possible technical options and all possible alternatives”.
Nonetheless, no real decisions on Greece are scheduled at the EU summit in Brussels, as the EU will most probably wait for the Greek vote. Danish presidency sources said that there may be a reference on Greece in the communiqué after the summit, without elaborating further on its content.
At the summit, Greece will be represented by Panagiotis Pikrammenos, a Council of State judge, who currently serves as caretaker prime minister. Although Pikrammenos does not have a popular mandate, all parties in Greece, including the pro-European ones, agree that there should be an easing of the austerity measures, since the Greek economy is in severe recession.
Pikrammenos is likely to communicate this message to his counterparts, but he cannot make any medium- or long-term commitments, since his tenure in office expires in a few weeks.