WORLD NEWS

What next for Greece? A look at its options in coming days

Jun 3, 2015, 11:25 AM

Drachma notes and coins, Greece’s national currency before adopting the Euro, are displayed f...

Drachma notes and coins, Greece's national currency before adopting the Euro, are displayed for sale at a street market in Athens, Greece, Wednesday, June 3, 2015. Greece's prime minister was heading to high-level meetings in Brussels on Wednesday to try to persuade the country's creditors to accept a proposal that might unlock much-delayed bailout loans and save the country from financial disaster. (AP Photo/Petros Giannakouris)

(AP Photo/Petros Giannakouris)

ATHENS, Greece (AP) — Greece’s bailout talks are going down to the wire.

The country faces debt repayments this month — starting Friday — and it is not clear how much of them it has money left to cover.

A default could lead Greece out of the euro, the currency used by 19 of the European Union’s 28 members. A country has never left the euro before, so such an event would put Europe and the global economy in uncharted waters.

As Greece and its creditors — the other eurozone states, the International Monetary Fund, and European Central Bank — remain locked in talks, here are some questions and answers on what might happen next.

___

CAN GREECE REACH A DEAL BY FRIDAY?

It’s possible.

Though creditors are skeptical, the prime minister is holding a flurry of meetings with European leaders on what reforms his country must make to get the 7.2 billion euros ($8.1 billion) left in its bailout plan.

A deal would help Greece meet most of its repayments this summer — nearly 1.6 billion euros to the IMF in June and another 6.6 billion euros to the European Central Bank in July and August.

With a deal, Greece could be in time to get help to pay its debt on Friday.

___

WHAT HAPPENS IF THERE’S NO DEAL BY FRIDAY?

Greece might still be able to cover the 300 million euros it owes on Friday. It could, for example, have enough cash left over from raiding the reserves of state entities like hospitals, embassies and schools several weeks ago.

Even if Greece is not able to pay the IMF on Friday, it will not automatically be considered to be in default, just in arrears on its debt. According to IMF rules, only after its debt has been unpaid for a month will the country officially be in default.

But not paying this installment will set the clock ticking on its default and is likely to shake the markets. It could also lead worried Greeks to withdraw more of their money from the banks, something which has been happening at alarming rates in recent months. Greek authorities will be wary of destabilizing the financial system.

___

DOES GREECE HAVE ANOTHER OPTION?

Yes. Greece can ask to “bundle” its payments due to the IMF in June into a lump sum to be repaid on June 30. That would give the country just over three more weeks to reach an agreement with its creditors. Although allowed under IMF regulations, the bundling option is rarely used — the last country to do so was Zambia, in the 1980s.

___

LET’S ASSUME A DEAL IS REACHED THIS MONTH. WHAT THEN?

Depending on the nature of an agreement, it might need approval by some of the eurozone countries’ individual parliaments.

On the Greek side, Tsipras will have to bring the deal and whatever reform measures it contains back to Athens and persuade hardliners within his radical left Syriza party and in the governing coalition’s junior partner, the nationalist Independent Greeks, to back the plan.

He has already faced public opposition from hardliners who argue that no deal and even a euro exit would be better than rolling back on election promises to repeal bailout austerity measures. It was on those promises that Tsipras was elected in January.

Some in Greece — including members of the governing party — have suggested early elections or a referendum might have to be called if the deal contains concessions to the country’s creditors that some Syriza lawmakers refuse to back in a parliamentary vote. Others have suggested the deal won’t need to be brought to Greece’s parliament at all.

Still, even if it is and Syriza sees defectors, it is likely to pass as opposition party members have said they will back an agreement that pulls the country back from the abyss of default.

___

SO ONCE A DEAL IS REACHED, GREECE’S PROBLEMS ARE SOLVED?

Unfortunately, no.

The 7.2 billion euros of remaining bailout funds it is trying to get will only cover it for a while, and Greece faces a mountain of debt repayments this year.

Beyond that, the country’s public debt is so high — about 177 percent of gross domestic product — that it is unlikely Greece will ever be able to pay it all back. In its early days, Tsipras’ government had called for some form of debt forgiveness, and this issue could well return to the agenda once his acute liquidity problems are solved.

Greece’s government insists the country doesn’t want a third bailout, but says it does want to negotiate a new “growth pact” with Europe. Either way, few believe Greece can survive without some form of further help. Athens had wanted this new “pact” to be part of whatever agreement it reaches now, but whether that can happen remains to be seen.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

World News

A jet takes flight from Sky Harbor International Airport as the sun sets over downtown Phoenix, Ari...

Associated Press

Climate change has made heat waves last longer since 1979, according to study

A new study says climate change is making giant heat waves crawl slower across the globe with higher temperatures over larger areas.

18 days ago

FILE - Kate, Princess of Wales and Prince William travel in a coach following the coronation ceremo...

Associated Press

Kate and William ‘extremely moved’ by support since the Princess of Wales’ cancer revelation

Kate, the Princess of Wales, and her husband, Prince William, are said to be “extremely moved” by the public’s warmth and support following her shocking cancer announcement

23 days ago

Kate, Princess of Wales, is seen visiting to Sebby's Corner in north London, on Friday, Nov. 24, 20...

Associated Press

Kate, Princess of Wales, says she is undergoing chemotherapy for cancer

Kate, the Princess of Wales, said Friday in a video announcement she has cancer and is undergoing chemotherapy.

25 days ago

Russian President Vladimir Putin is seen visiting the SKA Arena sports and concert complex in St. P...

Associated Press

Putin extends rule in preordained Russian election after harshest crackdown since Soviet era

President Vladimir Putin sealed his control over Russia for six more years on Monday with a highly orchestrated landslide election win.

29 days ago

President Joe Biden walks towards members of the media before boarding Marine One on the South Lawn...

Associated Press

U.S. military airdrops thousands of meals over Gaza, many more airdrops expected

U.S. military C-130 cargo planes dropped food in pallets over Gaza on Saturday in the opening stage of an emergency humanitarian assistance.

1 month ago

Russian opposition leader Alexei Navalny, who reportedly died in prison on Friday, Feb. 16, 2024, i...

Associated Press

Alexei Navalny, galvanizing opposition leader and Putin’s fiercest foe, died in prison, Russia says

Alexei Navalny, the fiercest foe of Russian President Vladimir Putin, died Friday while incarcerated, the country's prison agency said.

2 months ago

Sponsored Articles

...

DESERT INSTITUTE FOR SPINE CARE

Desert Institute for Spine Care is the place for weekend warriors to fix their back pain

Spring has sprung and nothing is better than March in Arizona. The temperatures are perfect and with the beautiful weather, Arizona has become a hotbed for hikers, runners, golfers, pickleball players and all types of weekend warriors.

...

Collins Comfort Masters

Here’s 1 way to ensure your family is drinking safe water

Water is maybe one of the most important resources in our lives, and especially if you have kids, you want them to have access to safe water.

...

Collins Comfort Masters

Avoid a potential emergency and get your home’s heating and furnace safety checked

With the weather getting colder throughout the Valley, the best time to make sure your heating is all up to date is now. 

What next for Greece? A look at its options in coming days