Greek bailout on hold again – what’s gone wrong this time?

THE ON-OFF bailout of Greece looks decidedly off again this morning after frustrated EU finance ministers cancelled a meeting due to be held today at which the €130bn rescue package was expected to be rubber-stamped. Instead there are growing signs that Greece will never come up with all the stringent austerity measures demanded by Europe. And, on the other side, there are signs that senior European figures no longer care very much if Greece defaults next month and has to leave the eurozone as a result. How did it all turn so sour?

Undelivered promises

Jean-Claude Juncker, the Luxembourg prime minister and head of the eurogroup, blames Greece’s political leaders for failing to "flesh out" the austerity pledges they have made in a bid to get the "troika" of the EU, the European Central Bank and the International Monetary Fund to hand over the €130bn. Despite pushing through parliament a package of measures on Sunday, Greek leaders have still failed to supply details of how a €325m funding gap is to be closed, The Guardian reports.

Election problem

Even if the current Greek coalition were to finally give all the promises demanded, would those pledges survive the Greek general election in April? Centre-right leader Antonis Samaras "enraged Berlin over the weekend" according to The Daily Telegraph by suggesting that he would tear up the deal if he had the power to do so after the election. As a result, Jean-Claude Juncker is saying he has not received "the required political assurances from the leaders of the Greek coalition parties on the implementation of the programme".

Europe more bullish

There is more confidence within the eurozone nations now than there was when the Greek crisis erupted two years ago that they can withstand a Greek default. As a result, finance chiefs are more inclined to lay down the law. "We should have everything clear on paper," said the Dutch finance minister, Jan Kees de Jager. "We don't give an inch. We want everything, a complete package."

Luc Frieden, Luxembourg's foreign minister, said: "If the Greek people or the Greek political elite do not apply all of these conditions, I think they exclude themselves from the eurozone. The impact on other countries now will be less important than a year ago."

Ambrose Evans-Pritchard, the Telegraph’s international business editor, says: "The tone of recent comments from Germany, Holland and Finland suggest that the creditor powers have already decided to eject Greece, causing great bitterness in Athens."

Is it all futile anyway?

Fresh data just released about the Greek economy suggests the bailout might be futile anyway, says the Guardian – because the country’s economy is in an even more parlous state than anyone realised. As the BBC reports, the Greek economy shrank by seven per cent in the last quarter of 2011 – an acceleration from the five per cent shrinkage in the previous quarter. With unemployment already above 20 per cent and destined to rise because of the austerity measures, the country’s prospects of recovery look grim. ·