Greece… again.

The Observer Business Leader has some pertinent points about the latest phase of the Greek crisis. It notes that:

Greece’s predicament is simple. It has debt repayments to make this summer and it doesn’t have the money to pay the bills. The European Union can solve this acute cashflow problem by unlocking the funds pledged to Greece under the terms of last summer’s bailout agreement, but it will only do so if Athens demonstrates that it is serious about sorting out its budget. Austerity today will lead to generosity from EU finance ministers when they meet on Tuesday.

So that’s something to watch out for today. But it suggests that something has changed:

Here’s where things get interesting. The difference between this Sunday and all the other tension-packed Sundays that have studded the Greek crisis over the past six and a half years is that, this time, the battle is not between Greece and the “troika” of the European commission, the European Central Bank and the International Monetary Fund. Instead, there is a face-off between Europe and the IMF.

And:

The Europeans badly want the fund to be part of Greece’s bailout and to contribute money to it. But Christine Lagarde, the IMF’s managing director, says her support is conditional on two things: a credible deficit reduction plan and a decent slug of debt relief.
Hardline EU governments, led by Germany, have resisted this idea, fearing the Greeks will interpret any writedown of its debts as a sign of weakness that Athens will exploit to avoid meeting its budgetary commitments.

What’s astounding about this is that this is the same discussion that has been going on now for years. Greece is unable to make repayments, Europe demands more. The IMF plays a curious role both supportive of the latter and making a case for the former. Good cop and bad cop to the EU’s bad cop.

Is the situation genuinely as serious as follows?

EU finance ministers have sought to bridge the gap with the IMF by saying debt relief will be provided “if necessary” at the end of the bailout in 2018. This has the advantage, as far as Berlin is concerned, of deferring a decision until after German elections next year.
The IMF is not going to swallow this classic piece of Brussels fudge. It wants debt relief for Greece and it wants it now. If not, the fund will walk away. This has been made abundantly clear by Lagarde and her officials.

Well, the leader notes that Brussels won’t accept a write-off. But… and here is where the duplicity of the process becomes most evident, instead:

… so as an alternative to a “haircut”, the fund has proposed exceptionally soft terms: nothing until 2040, a 40-year repayment period thereafter lasting until 2080, and a 1.5% cap on interest rates. The fund believes this sort of package is necessary because Greece is expected to do the impossible – run a budget surplus of 3.5% of GDP excluding debt interest payments for two decades.

Nothing can be done. Something must be done. Some formula will be found so that something is done… The Observer believes that ultimately some form of the above will be implemented. Haven’t we been here before. Won’t we be again?