Analysis: Greek drama ‘a parody, a comedy and a tragedy’

As the escalating Greek crisis continues, one issue that is likely to emerge as a key sticking point in the forthcoming negotiations is the question of debt relief.

Minister for Finance Michael Noonan on Tuesday appeared to clarify what is emerging as a common position among creditors: while virtually all countries are opposed to nominal debt write-down for Greece, there is growing awareness that some debt reprofiling or restructuring may be conceivable, even essential, provided that Greece recommits to reforms.

Indeed, European Commission officials have said that a pledge to consider some form of debt restructuring was part of the plan for a third bailout for Greece.

Still, among member states the issue remains highly contentious. With any application to the ESM fund needing the support of all 19 euro zone member states, the views of each finance ministry on debt relief – which is likely to be a red line for the Greek government – matters.

Politically, is there any real appetite in the room to cede to significant concessions to Greece?

With goodwill draining away, particularly after Tuesday’s failure of the new Greek finance minister to present specific proposals at the eurogroup, the number of its allies openly lobbying for debt relief is dwindling.

France alone

True, Sunday’s vote has seen renewed – if lonely – efforts by French president François Hollande to broker a compromise and keep intact the euro legacy of his predecessor, François Mitterrand. But most of the other euro zone members were not trumpeting further concessions to Greece.

A cursory stop through the various euro zone countries shows that France is virtually alone in is call for an accommodation with Greece.

Poland has proven a conciliatory voice in recent days. Despite facing a difficult re-election fight in the autumn, Polish foreign minister Grzegorz Schetyna has demanded a final push to keep Greece in the euro.

Visiting Ireland, however, Mr Schetyna warned that special conditions for Athens risked "losing sight" of previous crisis countries and boosting populist political forces.

Spanish prime minister Mariano Rajoy, under pressure from Syriza ally Podemos, has insisted that Greece "play by the rules" and is distinctly cool on debt relief. Portugal's premier, Pedro Passos Coelho, noted drily that "even if Greece goes, there'll still be 18" in the euro zone.

Rome’s sympathy towards the Greek cause has been diluted since Athens reportedly began asking awkward questions about Italy’s debt situation in meetings.

Consistently hard-line on Greece is the northern European bloc around Germany, stretching from the Netherlands up to Finland and down to Austria.

The Benelux countries and Austria have remained in unison with Berlin in demanding that aid for Greece depends on successful reform implementation.

Cheerless Dutch

Dutch prime minister

Mark Rutte

was “cheerless” as he arrived for another meeting with nothing from Athens to discuss. His finance minister,

Jeroen Dijsselbloem

, hoping to be re-elected as euro group head next week, won’t depart from his hard line at a meeting on Wednesday with German MPs in the Bundestag.

Finland’s new centre-right government has always taken a tough and sceptical line towards Greece, even demanding €1 billion in collateral for its previous Greek loans.

Finland’s opposition to debt relief is not surprising, given that it has committed effectively 10 per cent of its budget to Greek loans and Helsinki now has a vocal bailout critic in the new centre-right ruling coalition.

Foreign minister Timo Soini, head of the populist Finns party, has called the Greek drama "simultaneously a parody, a comedy and a tragedy . . . that will continue as long as the milkmaid has a cash cow to milk".

Perhaps the most vocal critics of Athens are those with a lower standard of living than the Greeks. The Baltic countries, which adopted painful reforms after a financial slump, have never shown much patience for Athens.

Lithuanian president Dalia Grybauskaite spoke for all recently when she castigated Greece for "expecting everyone to help it after it lived above its means for years".

Fifth bankruptcy

That hard line continues right through former eastern bloc countries, with non-euro Czech finance minister Andrej Babiš noting drily that Greece has “gone bankrupt four times in the last 200 years and should do so a fifth time”.

Slovakia's finance minister, Peter Kazimir, said that even nominal debt relief was "impossible for my country".

A common line among these former eastern bloc countries is the corrosive political effect of asking their own, less well-off voters to back loans to Greece with no visible reforms in return. Despite years of hardship, Bulgarian premier Bojko Barissow noted that “the Greeks still live better than us”.

After five years of bailing out Greece through gritted teeth, however, even its most vociferous critics may have to accept one final concession: restructuring Greek debt.