No deal may push Greece to ‘painful exit’
Print Edition
THE Greek central bank warned for the first time yesterday that the country could suffer a “painful” exit from the eurozone and even the EU if it fails to reach a bailout deal with international creditors.
The warning comes as talks over the release of the last 7.2 billion euros (US$8.1 billion) in rescue funds from Greece’s bailout from the International Monetary Fund, Euopean Union and European Central Bank are deadlocked, with payment deadlines looming.
All eyes are on a meeting of the 19 eurozone countries to take place today in Luxembourg.
Deepening the tensions, Greek Prime Minister Alexis Tsipras said yesterday that an EU “fixation” on pension cuts would scupper any hopes of a default-saving agreement.
“There is no room for further cuts without affecting the core of the (pension) system,” Tsipras said after meeting with visiting Austrian Chancellor Werner Feymann, one of the few European leaders supporting Greece in the talks.
“This insistence on cutting pensions is incomprehensible,” the Greek premier said. “If Europe insists on this incomprehensible fixation ... it must accept the cost of a development that will benefit no one in Europe.”
In one of the starkest warnings so far from a Greek institution, the Bank of Greece said failure to reach an agreement would “mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and — most likely — from the European Union.”
Yet while the atmosphere between Greece and its creditors has worsened, the central bank said only a “little ground” separated the two sides.
Relations between Bank of Greece Governor Yiannis Stournaras and the ruling radical left Syriza party have been strained from the start, with the leftists trying to block his appointment last June.
Analysts have long warned a default could lead to a messy exit from the eurozone.
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