By SUZANNE DALEY, New York Times
Like prizefighters, the two sides of the negotiations over the Greek bailout have been circling each other, throwing punch after punch.
On Friday, Greece’s prime minister, Alexis Tsipras, headed to Russia and suggested he was looking for “safe harbors,” while the day before officials at the European Central Bank sent gasps through Athens by declaring that Greek banks might not open on Monday.
It is a mesmerizing slugfest, if only because it is so out of step with the way things are usually done in the pastel corridors of the European Union headquarters in Brussels, where agreements are hashed out behind closed doors and all parties emerge with smiles and set scripts.
Perhaps as never before, Europe — and indeed the world — are witnessing a messy public negotiation, where each side seems willing to predict the end of civilization as we know it unless the other caves in.
Despite those histrionics, so far every make-or-break deadline for resolution has been extended, and as the two sides are set to meet once again in Brussels on Monday, four days earlier than expected, there is every reason to expect the latest deadline will be extended once again.
Both sides have a lot of reasons to work out — or at least paper over — their differences, and even if Greece does default, experts say, the most likely outcome would be yet more negotiations.
But that has not kept Greece and its Germany-led creditors from offering up some pretty scary scenarios and insulting language as they vie for the upper hand.
Some analysts say the negotiations erupted into such bitterness because both sides have handled them so badly and because after six months, with so little progress made, both sides want to make sure that they will not be blamed if they fail to come to an agreement.
“They are trying to craft a narrative that will make it look like it’s not their fault,” said Simon Tilford, the deputy director of the Center for European Reform in London. “The Germans are saying that the Greeks are hopelessly confrontational, obdurate and emotional and that Greece can’t be saved.”
The Greeks, he added, are doing their best to make clear that the creditors are offering only more of the same policies that have led to higher taxes, huge cutbacks in spending, and economic collapse, while doing nothing to address the underlying problem of a crushing debt load. The director of the International Monetary Fund, Christine Lagarde, recently expressed her frustrations, saying she would like to “restore a dialogue with some adults in the room.” It was not immediately clear which side she was referring to, if not both.
Despite the European Central Bank’s threat to close the spigots, it kept pumping money into the Greek banks in a life-support operation on Friday and promised more for Monday after the constant talk of dire consequences caused something of a bank run in Greece.
Mr. Tsipras assured Greeks that the prophets of “crisis and terror” would be confounded and that his government would yet strike a deal with its creditors, the eurozone member states, the European Central Bank and the monetary fund.
Some analysts have begun to think that Greece might be allowed to stay in the eurozone even if it does default, and few think it is conceivable that Greece would ever be kicked out of the European Union.
“We are in uncharted waters,” said Mr. Tilford, who added that, in the end, politics and regional security may well trump economics. “There is no way Europe will have a failed country in the Balkans,” he said. “The pressure against letting that happen would be enormous.”
Yet the verbal jousting over the past six months has sometimes suggested otherwise.
Creditors have repeatedly warned that Greece — if it does not agree to new austerity measures — will be forced to leave the euro with disastrous consequences for its economy, while Greek officials have predicted that if they are forced to make a so-called Grexit the rest of the Europe Union will suffer, too.
At issue are steps creditors are insisting Greece take before they release a $7 billion loan that Greece needs, essentially to pay off other loans, including $1.6 billion due to the monetary fund on June 30.
The creditors are pushing for more cuts in spending, including to pensions for even the poorest recipients, and another round of tax increases. Mr. Tsipras has refused, saying such measures would be a further blow to the country’s economy and would create a humanitarian disaster.
Mr. Tsipras, who has called on the creditors to take back their “irrational demands,” made a show of thumbing his nose at Europe on Friday as he participated in a grand pageant of solidarity, friendship and economic cooperation with Russia, a move that seemed tailor-made to annoy his European allies who are standing united in imposing sanctions on Russia for its support of rebel separatists in Ukraine.
German officials, meanwhile, have claimed they will not be much bothered by a Greek exit. They have labeled Mr. Tsipras’s young government “amateurish” and called on the blunt-spoken finance minister, Yanis Varoufakis, to stop “gambling.”
While the Germans have accused the Greeks of intransigence, experts point out that so far it is the Greeks who have moved from their original position, not the creditors. “All sides are exhausted and frustrated,” said Jens Bastian, an economics consultant based in Athens and a former member of the European Commission’s task force on Greece. He said he expected the creditors to present new proposals on Monday that would ease demands for pension cuts, as Greece has insisted, and deliver the $7 billion over the next six months as progress was made on various issues.
“Both sides,” he said, “want to be able to say they gave it everything they’ve got.”
