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The Greek default crisis, in one tweet

The latest round of Greece/eurozone crisis — touched off by Syriza winning the Greek election in January — is reaching a close. Other European Union member states are no longer scared of Greece defaulting, so the efforts of Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis to secure a better deal for Greece are failing.

This tweet, capturing and translating three Greek newspaper front pages, tells the story:

Greece is running out of money

At the end of the month, Greece needs to give the International Monetary Fund €1.6 billion that it owes as part of the terms of the bailout deal reached way back in 2010. If Greece does not repay the loan, the European Central Bank says it will stop supporting Greece's banking sector. That means the Greek economy will collapse unless the Greek government either manages to make it illegal for Greeks to take their euros abroad (which would de facto be the end of euro membership) or else starts issuing its own currency (which would de jure be the end of euro membership).

To get the money it needs, Greece needs the cooperation of other European Union governments.

That, in essence, is what Greece and its partners have been negotiating over for the past several months: how large a budget surplus Greece will be required to run, and what kind of "structural reforms" Greece will be required to undertake.

The sticking points

It's worth saying that to a large extent the negotiations keep breaking down because of a lack of trust. Other European governments do not fundamentally believe Syriza intends to reform the Greek economy and Greek state in a constructive way. Greece's government does not believe its foreign creditors have Greece's best interests at heart.

But the core sticking points seem to be twofold:

  • Greece's creditors want cuts in pension spending, specifically achieved by raising the retirement age.
  • Greece's creditors want a broader basis of Greece's Value Added Tax.
  • There is a narrow disagreement about exactly how big a budget surplus Greece should promise.