“Potentially Greece could exit from the Euro-Zone area. That would have huge implications for the European, world, and indeed Australian economy,” says Professor Fariborz Moshirian from the UNSW Business School.
Greece is now closer than it has ever been to stumbling out of the Euro-Zone.
“There is no doubt that EU governments are putting enormous pressure on Greek politicians,” he said, as European leaders gather for an emergency summit in Brussels that could break the deadlock around the country's debt crisis, or force the countries exit from the Euro-Zone.
Last night Greek PM Alexis Tsipras set out new proposals to try to prevent a default on a one and a half billion euro IMF loan. Greece must repay the loan by the end of June or risk a process that could lead to exit from the Euro-Zone, particularly if the Greek government does not honour its financial commitments to the ECB in July.
“Everyone involved in the talks must play a role, and they realise that the Greek banking system could become insolvent and that means Greece could become bankrupt,” says Professor Moshirian, Director of the Institute of Global Finance at UNSW Australia, ahead of the talks which are taking place tonight, Australian time.
The discussions about EU debt have been deadlocked for five months. He says “the European Commission, the IMF and the European Central Bank is unwilling to unlock billions of euros of bailout funds until Greece agrees to economic reforms they want to see introduced.”
However, protestors in Greece argue that these reforms are too stringent, and would increase the austerity the country is facing.
“At the talks EU governments are trying their best to make sure Greece stays in the EU - as indeed is Greece. The majority of Greeks want to stay in the EU too. I do hope both Germany and Greece will come to some sort of compromise, in the face of political forces which must accept this is the point of no return.”
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Julian Lorkin: 02 9385 9887
AGSM Scholar, Professor, Director of the Institute of Global Finance
School of Banking & Finance