Tensions between Greece and its EU paymasters escalated over the weekend, after Athens’ anti-austerity coalition said it would call a referendum or a new elections if Eurozone finance ministers reject its proposed reforms at Monday’s ministerial meetings.
Greek finance minister Yanis Varoufakis said on Sunday that his government was prepared to hold a referendum or fresh elections on government policy should the Eurozone withhold financial aid at a key Eurogroup meeting in Brussels on Monday.
The government on Sunday also clarified that the referendum would relate only to government policy and not Greece’s place in the 19-country Eurozone, which the government insists is a given. Greece’s former Prime Minister and current head of the opposition said a referendum would be a “very bad development.”
Yanis Varoufakis has been at the centre of heated deliberations concerning Greece’s bailout program, which expired at the end of February. Greece had agreed to a conditional lifeline last month, which would fund the government until the end of June and give policymakers more time to iron out a more sustainable agreement. Most analysts dubbed the loan extension as a failure for Athens, which has repeatedly pledged to scrap condition-laden reforms.
Dijsselbloem received Greece’s prospective reforms last Friday. While they included some novel strategies for combatting tax evasion, they were not enough to convince the Eurogroup president. Greece’s finance ministry reportedly spent the weekend fine-tuning its reforms ahead of Monday’s Eurogroup meeting.
Faced with the prospect of insolvency, Greek Prime Minister Alexis Tsipras reached out to French President Francois Hollande and European Central Bank President Mario Draghi over the weekend. Tsipras’ far-left coalition, which catapulted into power less than two months ago on the platform of “anti-austerity,” has strained relations with Eurozone partners, especially Germany, which has shouldered the bulk of Athens’ €240 billion bailout program. Germany has also been Athens’ harshest critic, demanding to see more fiscal restraint on the part of the Greek government.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.