International creditors and Greece failed to strike a deal on the bailout program last week, on technical level as well as on political level – finance ministers met at a Eurogroup meeting. According to the creditors, their side of the negotiations made as much concessions as realistically possible and it is up to the Greeks to concede something. But the Greek government seems to have become tougher than before. At the Eurogroup meeting, the Greek finance minister failed to produce any credible reforms plan, he only presented some ideas on a debt brake. This, however, is miles away from what the creditors demand – namely pensions cuts and VAT adjustments. These are red lines for Greece, which Varoufakis confirmed. Even before the Eurogroup meeting in Luxembourg last week he stated that there would be no deal that day and reiterated the Greek refusal of reforms demanded by the creditors. Eurozone ministers, now openly speaking about Greek default and euro exit, were shocked that Greece did not even ask for another bailout program extension which would, at least theoretically, buy more time. Following the collapse of Eurogroup talks, European Council president Donald Tusk called an emergency meeting of EU presidents and prime ministers for Monday 22 June. This is widely seen as the last of the last chances for Greece. Concessions are expected from the Greek side, but German finance minister Schauble said last week he was skeptical about the outcome. According to eurozone sources, EU leaders are not ready to discuss specifics – these must be prepared beforehand on expert level. Therefore if the Greeks arrive with another set of fresh ideas to discuss, there will likely be no decision. Although the prospects are not good, German Chancellor Merkel reiterated that she was prepared to discuss until the last minute.

Meanwhile ordinary Greeks accelerated their withdrawals of bank savings. The Greek banking system is being held afloat only with the help of ECB emergency funding, which extended its help on Friday. But without a political deal on Monday, the situation will likely become unsustainable, probably forcing Greek authorities to introduce capital controls. Which would be the beginning of the end of Greece in the eurozone.

For more, click here, here and here.