After months of wrangling with the Syriza administration, Europe seems primed to make an example of Greece in light of other regional developments that could force a change in policy. Europe’s hardline attitude comes at a time when the tides are shifting against austerity driven governments. For all ECB President Mario Draghi’s efforts devoted to reviving the Euro Area, high unemployment low growth continue to plague the monetary union amid fiscal austerity. Years of begging and pleading with regional policymakers to institute pro-growth fiscal policies have continued to fall on deaf ears, much to the detriment of incumbent politicians that might now be forced to rethink their strategies. The defeat of the Conservative People’s Party in Spain accurately depicts the frustration in an economy that is mired in high unemployment and inundated by corruption and cronyism. If Greece is allowed to strong arm creditors with demands, the Eurogroup fears that the strategy might prove contagious and favored by other anti-austerity movements.
The rapid dismissal of Greek demands is creating a certain wariness and panic amongst citizens rushing to pull whatever deposits remain in regional banks. With the ECB refusing to lift the ceiling for bank assistance, the pieces of the final puzzle are falling into place. Even if Greece was able to implement the necessary reforms and satisfy the demands of European partners, the negotiations for the next bailout tranche would be just around the corner as the country requires an addition EUR 30 billion to make it through the fall. European creditors are likely to balk at any further bailouts based on the present level of intransigence, hence the willingness to let Greece be the sacrificial lamb to scare the rest of Europe and force everyone else to fall into line. The Euro is taking notice and the latest lacking compromise furthers the fractures already present in the Union as national interests become superseded by Pan-European integration.
Europe Refuses to Budge on Greece
Andamento del mercato - 27/05/2015