On Monday Greece is meant to produce her schedule of reforms to prove that the new government is serious about accepting the disciplines and rules of the Euro area. By all accounts it is taking time to produce much to go on the list. The government is much keener on measures which target tax avoidance and evasion, than on measures which cut spending. It is also willing to impose more taxes on the rich, for those who have stayed to pay. Previous governments said they were seeking to cut avoidance and remove evasion, so it will be interesting to see what new ideas they come up with which might increase the revenue rather than make the position worse.
The truth is Greece is running out of money, and does need to borrow more. The EU has slipped them another 2bn Euro, and the European Central Bank has cut them a lot of slack, through its Emergency Lending facility. They have needed that, as there has been some flight of deposits out of Greek banks during the present period of uncertainty.
Greece needs money for a variety of purposes. The state needs more money to pay its daily bills, as it appears the primary balance or surplus has slipped away. The state needs money to repay debts owing soon. The commercial banks need money to deal with deposit outflows and to keep them liquid enough for their day to day operations.
Many Greek people need money. Out of work and squeezed too much, the voters have made clear they want change. The trouble is, the state has no extra money to give them, and the private sector is still badly hit by poor demand, lower incomes and by the tax demands of a state that needs more cash.
The government can see this, and wants to change the position somehow. It finds instead that creditors expect payment and the European institutions expect Greece to play by the rules. Greece lives on in hope that the EU will make an exception again for this country. The governments of Spain, Italy and Portugal are none too happy at any special treatment. Why should Greece be let off the controls if we have to keep to them, they ask? Ringing in their ears is the noise of new challenger parties in their countries, watching everything that Syriza says and does with a view to exploiting it.
I cannot ignore this drama. A huge amount is resting on it. The Eurozone is inching forwards economically at last. It is in the UK’s interest that their economies do pick up, and their citizens buy more goods and services. Greece could still damage all that. Cans kicked down roads too many times fall to bits.