Greece cri­sis con­tin­ues: Driv­ing to bank­ruptcy in a Merc

Financial Mirror (Cyprus) - - FRONT PAGE -

Chief among th­ese is the in­ten­tion for a more ef­fi­cient tax col­lec­tion sys­tem and more specif­i­cally, an in­ten­tion to go af­ter the big tax evaders. That’s fine, but the big fish, those with the for­eign bank ac­counts, have long ago taken their money out of Greece. Hope­fully, it will be pos­si­ble to re­trieve some of it but that will take years. As for the more mid­dle and lower in­come groups, mod­ernising the tax col­lec­tion sys­tem is clearly some­thing Greece has long needed. This re­quires records and fac­tual ev­i­dence. In other words it re­quires re­struc­tur­ing present in­sti­tu­tions and sys­tems and a lengthy time pe­riod.

Time is some­thing Greece does not have. Tax re­ceipts are down. Cap­i­tal is flee­ing the coun­try. Bil­lions are due to be paid to the Eu­rogroup this month. An air of des­per­a­tion per­me­ates the Greek gov­ern­ment’s re­cent ac­tions, such as raid­ing pen­sion funds to meet March pay­ments.

From the out­set, the Eu­rogroup strat­egy was to avoid be­ing the bully of Greece. That was the game plan for the first round of ne­go­ti­a­tions. But no more.

A num­ber of the Eu­rogroup mem­bers are los­ing pa­tience. Hav­ing played the kind, un­der­stand­ing ne­go­tia­tor for the first round of ne­go­ti­a­tions, the gloves are now off. Don’t be fooled by An­gela Merkel re­peat­ing over and over that “we want to keep Greece in the euro”. She is re­ally pre­par­ing for just the op­po­site.

The Eu­rogroup will hence­forth ne­go­ti­ate as what it re­ally is – a banker deal­ing with a po­ten­tially delin­quent bor­rower. More­over, there is a dis­tinct pos­si­bil­ity that the banker may be reach­ing the point where he is will­ing to cut his losses and write the whole ex­er­cise off as a bad debt.

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