Charting A Eurozone Struggle

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Greece must push for the necessary reforms to remain within the Eurozone

Greece is in turmoil, when you look at the papers. The country still retains its picture perfect scenery, its bustling metropolitans and of course its ancient architecture, that is simply breathtaking but inside, the economy is also simultaneously travelling on troubled waters. Polls have found an overwhelming majority (79 percent) of Greeks to be pro-Eurozone and yet the recent referendum vote has puzzled all quarters of the EU.

The Prime Minister, Alexis Tsipras showed signs of early optimism as he tried to push for the country to remain within the Eurozone. But this came infront of a lot of sceptism, inclusive of leading party politicians, who have expressed puzzlement at how Tsipras expects to pull off this feat, when it comes to labour market and pensions reforms.

And yet that is precisely what is needed from Tsipras – reform proposals, and an inability to grant them is frustrating the European Central Bank. Tsipras instead wants hard and cold cash, in exchange for as little reforms as possible but then that would mean that the public is no longer seeing any improvement in their daily lives that reforms would bring. The ordinary public’s view is that that some sacrifices have to be made and they are pleased to see the Prime Minister put up a fight to keep the country within the common currency framework, but this perspective is thinly laced with contempt; it’s not very clear if the contempt is for previous governments also unable to handle the financial fiasco.

Some of Tsipras government’s plans have been accruing €500m from value-added tax, but it was not accepted because there was no mention of raising a further €500m from pension cuts. Tsipras is always at loggerheads with those at the top in the European Commission over proposals but he has had a lot to worry about in his own party too.

Many MPs are struggling with the decision to call an early election, and this rebelling could even topple the government. The “civil war” raging inside the leading Syriza party must be extenguished and reforms need to be introduced if Greece still expects to stay within the Eurozone.

The German government is fully behind the idea of Greece remaining in the Eurozone, as stated by the Deputy Chancellor Sigmar Gabriel, last night. If reforms are put in place, then the Greek bailout deal could be extended to next March, as €10bn saved from a previous bank recapitalization could be forked out. The newly injected funds can provide Athens with the confidence needed to make repayments for the remaining of the year.

The German government is already conviced of the idea, because it wants to see Greece share the common currency benchmark. But the Commission still needs to warm to this idea, and Jean Claude Juncker has expressed a desire to fight for Greece’s survival in the Eurozone. It is very important to know that without both the Commission and Germany’s nods this deal is not going through. If the reforms are introduced then wages can be paid, pensions can be paid and payments to the IMF will also fall on the dot.


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