It’s the morning of Friday 19 June. In Luxembourg, the finance ministers from the eurozone’s 19 countries are heading for home. Talks aimed at finding a solution to the Greek crisis have ended in failure. For once, there has been no 11th hour fudge. After years of kicking the can down the road, the end has been reached.
In Athens, tourists out for an early look at the Parthenon find they can no longer get euros out of the cash machines. Contingency plans have been triggered to prevent a run on the banks. Strict capital controls are in force.
As late as the middle of last week, this all seemed a bit fanciful. Officials in Brussels were briefing that a breakthrough was close. Alexis Tsipras, the Greek prime minister, expressed confidence that the differences between his government and the troika of the International Monetary Fund, the European Commission and the European Central Bank, could be resolved.
Sure, political and economic analysts contemplated the prospect of Greece running out of money and defaulting on its debts, but the assumption was that there would be a deal. Not a deal that would finally resolve the five-year long Greek debt crisis, mind, but at least something that would buy some more time.
That could yet be the way things develop. Harold Wilson once noted that a week is a long time in politics. In eurozone politics, the 72 hours left until a decision has to be made represents an eternity. Things currently look bleak, but never rule out the possibility of a deal.
That said, the chances of a Greek default are now higher than they have ever been. The IMF called its negotiating team home from Brussels last week because the talks were going nowhere. Attempts to get them going again were abandoned on Sunday after less than an hour. The rhetoric has become angrier and angrier as positions have hardened.
Normally, the choreography that precedes a euro fudge would see the two sides edging closer together. The officials that prepare the ground for a deal would be piecing together 90% of the final agreement, leaving ministers the other 10% to haggle over on Thursday. That does not appear to be happening, which is why both sides are preparing for a default.
Can it be prevented? Yes, but it would either require the troika to moderate their key demands on pensions, tax and labour market reform, or for Tsipras to cross his red lines on the same issues. Neither looks likely.
