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Greece's threat of suicide may be futile

ECB's bond-buying programme is designed to protect the euro from the consequences of a Greek exit or default.

Published Mon, Jun 15, 2015 · 09:50 PM
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London

THE good news is that a Greek default, which has become more likely after Prime Minister Alexis Tsipras's provocative rejection of what he described as the "absurd" bailout offer by Greece's creditors, no longer poses a serious threat to the rest of Europe. The bad news is that Mr Tsipras does not seem to understand this.

To judge by Mr Tsipras's belligerence, he firmly believes that Europe needs Greece as desperately as Greece needs Europe. This is the true "absurdity" in the present negotiations, and Mr Tsipras's misapprehension of his bargaining power now risks catastrophe for his country, humiliation for his Syriza party, or both.

The most likely outcome is that Mr Tsipras will eat his words and submit to the conditions set by the "troika" - the European Commission, European Central Bank (ECB) and the International Monetary Fund - before the end of June. If not, the ECB will stop supporting the Greek banking system, and the government will run out of money to service foreign debts and, more dramatically, to pay Greek citizens their pensions and wages. Cut off from all external finance, Greece will become an economic pariah - the Argentina of Europe - and pu…

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