Greece on standby

By Nikos Xydakis

Greece is nervous and stagnating. Europe too is nervous, yet in motion.

France is jolting along: President Francois Hollande is trying to deflect attention from the unpleasant situation at home (also after the intimate and damaging account of his stormy relationship with former first lady Valerie Trierweiler portrayed in her recent book) with French involvement in conflict-torn Syria.

In Italy, Prime Minister Matteo Renzi is also behaving nervously as he tries to loosen the noose of fiscal discipline while attempting to check the incoming waves of undocumented migrants.

Both leaders are pinning their hopes on the promotion of growth and jobs at the European Union’s emergency summit on October 7. They both expect some relief from the monetary policy shift of the European Central Bank under Mario Draghi.

Nervousness gives way to anxiety as we turn to the geopolitical sphere. After the split in Ukraine and the damage done to Europe-Russia relations, the EU is holding its breath over Scotland’s independence referendum. A yes vote could break up the United Kingdom, but also rekindle separatist movements across the continent.

Nervousness in major European governments is naturally taking a toll on Athens as the Greek problem is slipping off the EU agenda. Meanwhile Germany is expected to strike a new balance with France, Italy and the ECB, and of course Russia and the United States. All that means it is even less likely to be in the mood for compromises as far as Greece is concerned. It is one thing to expect some loosening of German economic orthodoxy vis-a-vis France and Italy but it is quite another to expect Berlin to offer concessions to the small and purportedly sinful nation that is Greece.

It is likely that the Greek problem will be left unsolved, that is without a meaningful adaptation of the bailout program. It will be dealt with as a Greek problem, not a European one. Even the next troika assessment in late September will take place in the shade of the October 7 summit in Italy.