“Given that Greece has no access to money markets, and also in view of the ‘spikes’ in our debt repayment obligations in the spring and summer of 2015, it ought to be clear that … it would [be] impossible for any government to service its debt obligations,” said the five-page letter leaked to the Financial Times.
“Servicing these repayments through internal resources alone would, indeed, lead to a sharp deterioration in the already depressed Greek social economy – a prospect that I will not countenance,” the letter said.
Tsipras, who will hold face to face talks with Merkel for the first time on Monday, issued the warning as it became clear that the cash-strapped Greek state has come perilously close to running out of money. The coalition government, dominated by Tsipras’ leftwing Syriza party, may have to resort to raiding insurance funds to pay pensions and public salaries at the end of the month.
Officials in Athens said Monday’s meeting with Merkel – which comes at a potential turning point for the eurozone – would be used to ram home the message that the new administration was determined to implement reforms. Berlin, the biggest contributor to the €240bn (£175m) bailout propping up the Greek economy, has made clear that without a concrete plan to overhaul the country’s dysfunctional state, there can be no further aid.
Tsipras, insiders said, would be attending the talks armed with an array of specific economic measures. “Under no circumstances do we want to appear submissive towards the Germans,” one official said. “But we want to convince [them] that we have a plan and the required determination to enforce it without calculating the costs.”
The proposals would include measures that no previous government had dared, from targeting oligarchs and corrupt vested interests to clamping down on tax evasion. Privatisations – of particular interest to Germany but stalled since elections in January – would also be among them.
Trust between Europe’s paymaster and the eurozone’s weakest link has been badly dented in the two months since the radicals assumed power. Athens has ratcheted up the pressure, demanding that Berlin pay war reparations for Nazi atrocities.
Senior EU officials have said that five years into the euro debt crisis time is running out for Greece. Athens has been told it will have to renege on its pre-election promises if it wants the crisis-plagued country to remain in the 19-member currency bloc.
“This government has been given a last chance to prove it wants [Greece] to stay in the eurozone,” German officials were quoted as saying on Monday.
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