Editorial: The strength of the economy is wearing out

Every day that goes by, the climate in the progress of negotiations between the Greek government, the Europeans and the IMF is constantly getting worse, instead of improving. All messages from Europe consistently suggest that the possibility of an agreement on the 24^th of April is being postponed for the next Eurogroup on the 11^th of May, a day before the next IMF loan payment is due.

The statement that Mr. Schäuble made yesterday, after a few weeks of silence, is indicative: nobody knows how an agreement can be reached on Greece’s ambitious program. However much the government may insist that this climate of defeat is attributed to media pressure to accept recessionary measures, such as wage and pension cuts, collective dismissals etc, it is clear that the code of communication between the two sides has been lost in translation.

The differences remain unbridgeable, meaning that the bridge agreement that the government was aiming for by the end of April is being put on he back burner. The extension of this uncertainty though will bring a complete paralysis to the country’s economy. While wages and pensions are being paid in the public sector, the real economy has dried up completely and the banking system is under constant, dramatic pressure, causing their stock values to plummet.

The Prime Minister and the government officers may believe that they are gaining some political time, ahead of the difficult decisions that must be made, but the delays and failures in the negotiations have a serious impact on the economy. The real consequences from the credit crunch will soon begin to be visible, since many businesses are in a touch-and-go situation as far as liquidity goes, with obvious consequences on employment and fulfilling promises.

Before the situation gets out of hand, the government must finally set aside the political cost and go for a mutually accepted agreement, which will ensure the country’s smooth funding. Unfortunately there are no funds outside Europe and the economy cannot endure this water torture much longer.

TO VIMA