Greece Still Not Fully On Board With Recovery

 

It seems as if tensions are higher than ever regarding Greece’s position in the euro zone. The country put together 26 pages of reforms last week, its revised plan to fulfil its debt repayment obligations. Amid the proposal, a statement from the Greek government said the reforms were necessary so that “a speedy and successful conclusion to the Final Review, so that short-term funding issues can be resolved and current crippling financial and economic uncertainties brought to an end.”

A veiled threat

But while it seems on the outside that Greece is finally taking responsibility for its circumstances and trying to find a solution, there was also a veiled threat of sorts:

“The Hellenic Republic considers itself to be a proud member of the European Union and an irrevocable member of the euro zone. Yet the viability of that union, and especially of the common currency, is now in question, in the minds of many Greek citizens as it is in the minds of many among our European partners. It is necessary now, without further delay, to turn a corner on the mistakes of the past and to forge a new relationship between member states, a relationship based on solidarity, resolve, mutual respect and a new hope for common progress.”

Creditors at the European Central Bank and International Monetary Fund have stated that bailout funds for the embattled country would not be forthcoming unless it has a clear, sustainable reform schedule by the end of April. But up until now, it doesn’t seem that Greece has taken the matter seriously, hoping instead that the uncertainty that would arise from Greece being forced out of the euro zone would be enough to satisfy its demands.

To this point, Greece is repeatedly asking for more leniency in the bailout terms, while its lenders are calling on the country’s leadership to stick to the plan to which they had already agreed.

Not a bad thing

In an interview with CNBC, billionaire investor Warren Buffet weighed in on the idea of a Grexit, saying, “It could be a good idea (in) several ways if everybody learns that the rules mean something.” He added that while the number of countries in the euro zone wasn’t pre-ordained, it does need to have adequate management and each of the members must be of one mind and purpose. They must, as Buffet put it, “have somewhat compatible labor laws, fiscal deficits, general management of their economy that don't result in outliers that really aren't playing the game the way the rules are supposed to be.”

Preparing for the end

Meanwhile, the Bank of England is having UK banks put emergency plans in place to brace against the potential shock from Greece leaving the euro zone. The central bank believes that a Grexit is the single-biggest external risks to the UK’s financial stability.

It’s difficult to know exactly what impact a Grexit would have on the rest of the euro zone, but if things continue the way they have been with Greece, it’s becoming more likely that we’ll find out soon enough.