Berlin Might Trigger ‘Grexit’ if Not Impressed by Athens’ Reforms Plan

In case Germany is not impressed with the reform package Greece introduces Monday, Athens might leave the euro area very soon.

Kristian Rouz – In line with Friday’s agreement, Athens have prepared Sunday a package of reform measures in order to secure a yet another tranche of the Troika bailout. However, the Greek planning, to be discussed Monday, might not fully satisfy the Germans, who have been increasingly jumpy to kick Greece out of the Eurozone. As the German parliament has the final say on whether or not Greece will remain in the euro area, the re-introduction of the drachma might be not such a distant perspective.

Skepticism in regard of the Friday’s compromise deal is rife in both Germany and Greece prior to the discussion of the structural reform, devised by the Greeks over the weekend. The leftie government of Alexis Tsipras, who earlier promised to end the austerity, imposed by international creditors, is harshly criticized within the nation for misleading the electorate by not sticking to their earlier promises. It seems like Greece is still intending to carry on with austerity and reform in order to stay in the Eurozone.

However, the Germans are not confident they want the poorly predictable nation of Greece in the common currency area. The Greek bailout has already cost over 100 bln euros without any positive developments, and any Greece’s proposals will be met with suspicion.

It is "inconceivable that the German parliament can make a final decision on the bridge program for Greece before the end of February," Hans Michelbach of the Christian Social Union told the German newspaper Handelsblatt, meaning the parliament might trigger a process of divorce with Greece rather than approve a yet another costly bailout scheme for the nation, having postponed the necessary reform for so long.

Michelbach also said, as quoted by Bloomberg, any reform package proposed by Greece will not be approved, which means a Eurogroup meeting will occur on Tuesday in order to decide upon Greece’s destiny.

Looks like Syriza has managed to finally undermine what remained of the international trust in Greece.

According to Friday’s agreements, Greece will be receiving bailout money for another four months if it comes with a prudent reform package Monday, in case the latter approved by Troika – that means, Germany.

If bailout is discontinued, the Greek banking sector will imminently collapse and stocks crash as well. Euro will be negatively affected at first, appreciating thereafter if Greece exits.

Meanwhile, the Greek Marxists and other left-wing radicals have expressed their distaste of Tspiras’ readiness to continue the bailout, which Syriza earlier promised to end unilaterally.

"I apologize to the Greek people because I took part in this illusion," Syriza’s long-term member Manolis Glezos blogged. "Syriza's friends and supporters should decide if they accept this situation."

Wider public in Greece would not support the decision to leave the Eurozone, Alco polling company found out. The extension of bailout was met with a sense of relief as the euro is seen as a cornerstone of the nation’s financial stability. The Greeks voted for Syriza hoping to ease the pain of austerity, and that is what Tsipras might have achieved – while still receiving the international bailout money, the Greek government itself will define the timing and the reforms to implement.

If the Germans don’t say ‘no’.