As the Greek debt crisis returns to the international agenda, the new SYRIZA-led government is encountered with a serious dilemma. It either has to agree with bailout terms and ask for an extension of the current program or risk becoming isolated and partly losing its access to liquidity. The next two weeks will be critical. In particular, the Eurogroup meetings of Feb. 11 and Feb. 16 as well as the EU Summit of Feb. 12 will decide whether Greece will clash with its creditors.
Both the Greek and the German governments remain now adamant in their positions. Athens emphasizes the political legitimacy it has to renegotiate following the national election of Jan. 25. In contrast, Berlin is not prepared to accept changes in a financing program which had been accepted by all euro zone parliaments in the past and is currently in progress.
Finance Minister Wolfgang Schauble reminded his Greek counterpart Yanis Varoufakis that agreements have to be respected during their meeting in the German capital on Thursday. Germany believes that Greece should stay in the euro zone. It is not a coincidence that the German federal government has selected the title “Greece belongs to the euro” referring to the meeting between the two finance ministers on its website.
But Germany also believes that time is running out for Greece and it is therefore the latter which is under pressure to come to an agreement. The Greek government will have much more to lose by not making a step backwards in the next two weeks. The EU cannot change course as quickly as SYRIZA wants. The system of European bureaucracy cannot be ignored and international obligations have to be respected irrespective of governments.
By looking at the truth and accepting hard reality though, SYRIZA will gain valuable time in order to proceed with its reform plan and acquire sympathy at the EU level. It is only its political choice.