Another sorry chapter in the euro zone crisis unfolded this week in Brussels as Greece and its international creditors lurched from one meeting to another in a bid to resolve the deepening Greek standoff.
As one EU official put it, Greece and its EU lenders increasingly seem like a couple locked in a bad relationship. “The question is, do you muddle through, or have things broken down to such an extent that it’s time to go your separate ways?”
Certainly, the relationship between Greece and its EU and euro zone partners has brought out the worst in both sides.
Greek finance minister Yanis Varoufakis’s plea for an “honourable solution” for his country after talks broke down again on Monday was as pitiable as it was accurate, and stands as a damning indictment of the EU’s handling of the Greek question since the onset of the financial crisis.
The fact that, after six years in recession, Greece remains mired in unemployment and low growth raises serious questions about Europe’s austerity-focused response to the financial crisis.
Greek’s recurring travails also painfully reveal, once again, the flaws of the economic and monetary union and the single currency project that were present from the outset.
Troika imposition
More specifically, major questions have now been raised about the troika programme imposed on Greece.
One of Syriza’s strongest cards has been its argument that the reforms demanded by the troika were the wrong ones. Inspectors were obsessed with economic indicators such as budget surpluses and nominal GDP when they should have been insisting on fundamental reforms of the Greek economy.
As a result, Varoufakis is now arguing it is nonsensical to demand that Greece continues with the demands of a bailout that has proven to have been damaging.
The resurgent Greek crisis has also presented those at the top of the EU institutions with the first major economic challenge of their new tenure. The EU’s response to the latest Greek drama has been characterised by different approaches from the various EU players.
Even before Monday's eurogroup meeting, the notion that the European Commission was the real champion of Greece had been gaining traction in Greek media. Commission president Jean-Claude Juncker, himself a former eurogroup president, was in phone contact with prime minister Alexis Tsipras on Sunday and Monday following intensive weekend discussions in Athens between the government and the three creditor institutions.
On Monday, Varoufakis said he had been ready to sign a proposal presented by EU commissioner Pierre Moscovici before the eurogroup meeting, but that this had been changed by eurogroup president Jeroen Dijsselbloem.
Despite Moscovici’s protestations that there was “no good cop, bad cop”, the French economics commissioner has been painted as an unlikely hero of the current Greek drama, with Varoufakis publicly thanking him for his “highly positive role in this process”.
Whether the notion of a divided EU is a fallacy being driven by Athens, it leaves the eurogroup, especially Dijsselbloem, in a tricky position.
The expectation that Greece will request a loan extension on the basis of the so-called Moscovici plan means the eurogroup, and not the European Commission, will be blamed if the extension is rejected.
Cusp of a deal
Commission officials continue to stress that ultimately any decision on Greece needs the unanimous support of all 19 euro zone finance ministers. But Varoufakis’s claims that Greece was on the cusp of signing a deal brokered by Juncker and Moscovici may live to haunt Dijsselbloem if he fails to gain eurogroup backing for the request.
Over at the European Council, president Donald Tusk has not played a central role in the Greek crisis. The EU summit a week ago was dominated by Ukraine, not Greece. Tusk had communicated to national capitals beforehand that he saw the Greek crisis as an issue for the eurogroup, not EU leaders.
While Tsipras addressed EU leaders during the summit, any hope of securing substantial discussion of the impasse was given short shrift by German chancellor Angela Merkel and her French counterpart, who had arrived at the summit following 16 hours of intensive talks on Ukraine in Minsk.
While Tusk was technically correct in leaving discussion of the Greek bailout programme to finance ministers, it will be interesting to see if the Greek question is elevated to the level of EU leaders.
The central question may well be whether the current Greek impasse is a temporary challenge, or if it will become the defining issue for the EU and euro zone in 2015.