Greece’s decision not to pay the International Monetary Fund the €300m it owes the creditor today and to “bundle” all of the €1.5bn due in June to the end of the month means that the long-running saga over Greece is going to rumble on for a while. But a denouement is on the horizon.
The laborious negotiations cannot continue ad nauseam for the simple reason that with the payments due to the IMF, and almost €7bn due to the European Central Bank in July and August, Greece will run out of money. The banking system is already haemorrhaging cash, requiring the ECB to keep upping the liquidity it makes available to member country banking systems that are under pressure. This process is reaching the end of the road too. In a nutshell, the Greek government is going to have to default on someone: its creditors, or its people and its own party. Put another way, if its creditors don’t blink—and the latest proposals they “offered” to Greece constitute a sort of ultimatum—Prime Minister Tsipras will be forced to concede. At the margin, this seems the most likely outcome—at least for the moment.