Europe's Final (?) Countdown

When will the “endgame” of the Greek financial crisis actually end?

Yannis Behrakis / Reuters

Negotiations over whether, and how, Greece will pay its debts, cut domestic spending, or have to leave the euro zone continued on Friday with a new set of proposals from Greek Prime Minister Alex Tsipras—one that looks, in the words of one analyst, “more or less identical” to the austerity measures Greek voters overwhelmingly rejected in a referendum just five days ago. And next comes a series of deadlines that, we’re told, really will this time determine whether or not Greece gets to keep using the euro.

Previous deadlines in the country’s negotiations with its creditors, each in their own way critical, have passed without answering that question one way or another. First came the June 30 deadline for Greece to pay back a loan installment to the IMF, which it missed. With the country officially in default, another potential turning point for Greece’s future in the euro zone came when Greek voters said no to economic reform measures including tax hikes and pension cuts that European leaders had insisted on in exchange for lending Greece the money to pay back its other loans and keep its banks solvent. Still, euros circulated in the country, albeit fewer of them, since the government had imposed limits on cash withdrawals from banks.

So when does the clock actually start on the final countdown to “Grexit”? CNBC declared it back in February, when Greece’s last bailout was set to expire. (It got a four-month extension.) Since then, the countdown has gotten consistently more final. Greece had “pushed its creditors to the edge” and was approaching “crunch time” in March. The “endgame” was “looming in April. The “painful day of judgment” was “edge[d] closer” in May. And by the time the “clock” really got “ticking” in June, the country’s fate was “hanging in the balance.” Quoting German Chancellor Angela Merkel’s remarks Monday that “time is running out” for Greece, Bloomberg View’s Matt Levine noted: “When I Google ‘“time is running out” Greece’ I get 314,000 results. It seems to maybe be true, or truer, this time.” (He wrote that on Monday. When I ran the same experiment Friday, the tally was at 340,000. A LexisNexis search turns up a Wall Street Journal headline declaring “Time Is Running Out For Greece’s Economy” on September 4, 1985.) The Economist—perhaps sensitive to the risks of urgency inflation regarding a country that has made the cover nine times in the past five years—was restrained Friday morning, declaring Greece “on the cusp of the cusp.”

This time is different, though. Really. Greek banks are literally running out of euros and likely won’t get more from the European Central Bank without an agreement. That would force the Greek government to issue IOUs to pay its bills, over time effectively creating another currency. The Financial Times’s live blog tracking developments on Friday declared “the final countdown” to be “in progress.” And yet, as a band actually called Europe asserted in its running-mix masterpiece “The Final Countdown,” there are so many light-years to go, and things to be found. On Saturday, euro zone finance ministers will meet in an emergency session to decide whether they even want to reopen negotiations with Greece based on the new proposals. And if no agreement is reached then, an EU-wide summit will be held Sunday to, in the Financial Times’s words, “sort out the mess.” Should the mess remain, Greece’s banks could run out of money as early as next week.

It seems even Tsipras knows that this time is different. He was elected on dual promises of ending austerity and staying in the euro zone—two guarantees which, as negotiations have lurched confusingly toward the fork in the road between “Grexit” and a third bailout, appear to be mutually incompatible. Faced with the choice, Tsipras is trying to choose the euro.

The BBC’s Mark Lowen posed a sensible question: What do the Greeks get out of this? What was the point of the referendum? In theory, they will get some debt relief, which even the IMF has said they need. Carmen Reinhart, a Harvard professor who has researched sovereign debt crises, told The New York Times that historically, debt relief is the only way to resolve them. But the 13-page economic reform proposal Tsipras submitted Thursday doesn’t mention debt relief, and Merkel has been coy about what kind, if any, Germany would be prepared to help finance.

All of which leaves the possibility that, even if yet another round of negotiations this weekend between Greece and its creditors manages to avert a “Grexit” for now, the fundamental problems of unsustainable Greek debt, and the imperfect design of the euro zone as a whole, will remain. Will this weekend really resolve the uncertainty Greece has lived with for five years’ worth of running out of time? Hopefully so, and, given the trajectory of recent negotiations, very possibly not. But “the preantepenultimate countdown” doesn’t really have a good ring to it.