Eurozone countries are drawing up secret documents to force Greece out of the single currency, a memo from the Finnish finance ministry has revealed.
The monetary alliance is preparing to act should Greece be declared bankrupt next month. That will happen unless the eurozone agrees to pay aid to the beleaguered country within the next three weeks, according to a report in The Times.
The document warns of “very difficult political decisions” this spring as the left-wing government flirts with Russia over financial assistance rather than continue to call on Germany.
Greece has a little over a week to come up with fiscal reforms which will need to be agreed by all its eurozone creditors in order for the £5.2 billion of loans it needs to be sent so it can pay its bills for May and June.
But while countries such as Finland, Austria, Germany and the Netherlands are not prepared to unlock the cash until Syriza legislates on austerity measures, the government has to please everyone, including the same voters who elected it on an anti-austerity manifesto.
Finland, Germany, Austria, the Netherlands and others are not prepared to release the cash until Greece’s left-wing government legislates on key austerity measures it was elected to oppose.
Unless that legislation appears on the statute books, Finland expects Greece to give “prior notification” that it will not be able to pay back the €763 million due to the International Monetary Fund on May 12, putting the government in default.
The Finnish document, leaked to the Helsingin Sanomat newspaper and dated 27th March, says: “By tacit approval of the other eurozone countries a process is started that in effect results in Greece being expelled from the euro.”
The Scandinavian country is convinced that the single currency will be able to weather the storm of a country leaving the eurozone, given reforms over he past three years and measures taken by the European Central Bank including a policy of quantitative easing which has helped exports.
Ten year Greek government bond yields currently stand at 11.252 points, up from March when there was hope that a deal could be struck. In line with that market indicator, Greek bank deposits fell yesterday, indicating a capital flight from the country of more than €1 billion in the first week of April.
The sudden downturn caused the European Central Bank to almost double its emergency assistance to Greece, but by next Tuesday they are expected to be stretched to the limit as the government needs to pay its public sector salaries and pensions.
Greece is stuck on a carousel of debt, needing to pay Frankfurt €80 million in interest payments on April 20th and leaving it penniless until the EU and the same central bank agree further aid payments.
A European Official said that “patience had run out.”
“Greece has been asking for urgent support over the next two weeks but there is no willingness until people see concrete progress,” they said.
UKIP leader Nigel Farage said the eurozone countries would be “doing the Greek people a huge favour” by kicking them out of the single currency and they should “let them have their own currency back so they can devalue, trade and export at more competitive rates.
“Once Greece leaves the Euro and does well, I suspect other countries will soon follow. Iceland is a prime example of a country which came back from economic meltdown because it had its own currency. Other states can take confidence from the Icelandic recovery.”
While secret memos have been drawn up, Alexis Tsipras has been meeting with President Putin in Moscow, yesterday saying that: “Only together with Russia are we able to build a new architecture of security in Europe,” as they discuss energy supply and prices.
Under a deal being negotiated, Russia is offering money to Greece based on speculative profits from a gas pipeline between Russia and Europe which would run though Greece. EU officials see it as a sign that Greece is planning to protect itself from the fallout of it leaving the eurozone.
In a demonstration of further cooperation between Russia and Greece, Mr Tsipras said he and Mr Putin had managed to resume Greek agricultural exports which were stopped last year following Russia’s ban on western foods in retaliation to sanctions from Brussels.
He is expected to be the only EU leader to attend VE Day celebrations in Moscow next month, with the revival of memories of the Second World War being a tricky subject in the EU as Greece demands Germany should pay up to €279 billion in war reparations from the German invasion and occupation in the 1940s.
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