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European leaders are meeting again in Brussels today to decide on Greece's future — in or out of the eurozone. They've signaled that this weekend could be Greece's last chance to remain in the common currency. Here are six things you should know.
1) The Greek parliament basically capitulated on Friday
The last few months have seen a stalemate between Greece and its European creditors, with European leaders demanding big tax hikes and big cuts to pensions and Greece resisting these changes. A week ago, Greek Prime Minister Alexis Tsipras held a referendum on Europe's proposals, and the Greek people decisively rejected them.
Yet a few days later, the Greek parliament put forward a reform proposal that was similar to the European plan they had been rejecting for weeks. They did this after it became clear that they had no real leverage. The European creditors didn't feel bound by a vote of the Greek people, and it's the Greeks, not the rest of Europe, who are suffering most from the current stalemate.
2) Some Europeans doubt Greece will keep its promises
A big obstacle to reaching the deal is that some European countries don't believe the Greeks will faithfully implement the reforms they agreed to on Friday.
They point out that Greece has been deceptive in the past. For example, when the eurozone was created, member countries were required to achieve low deficits and low inflation before they could join the club. Greece was admitted in 2001, but it was later revealed that Greece was able to qualify only thanks to misleading statistics that made Greece's deficit look smaller than it was. Critics say Greece continued these tactics for almost a decade after admission to the eurozone, contributing to its 2010 debt crisis.
Critics think Greece is now so desperate for cash that it will promise anything to get the help it needs. But they're skeptical that Greece will actually follow through on its promises. So they're trying to get Greece to make commitments it can't wriggle out of later. For example, on Saturday, Germany circulated a proposal requiring Greece to put €50 billion in assets into a trust fund that would be used to pay off creditors. There have also been proposals to require the Greek parliament to implement its concessions in the next few days — before the next round of bailout money is delivered — and even to give the EU a greater role in day-to-day Greek policymaking.
3) Greece's biggest critics are Germany, the Nordic countries, and Baltic nations
This poll from YouGov gives a sense of how much voters' anti-Greece views have hardened in some European countries:
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The government of Finland has emerged as one of Greece's harshest critics, and it's not hard to see why. The country's voters are overwhelmingly opposed to giving Greece any more concessions.
Slovakia, Latvia, and Lithuania are also reported to be taking a hard line.
This could be a problem because the European Union has traditionally made big decisions by unanimous consensus. With voters in Finland and Denmark so vehemently opposed to compromise, it might be hard to get every European country on board with a Greek bailout proposal.
But Greece also has some powerful allies. Two of the eurozone's largest countries, France and Italy, have been pressing their European partners to compromise.
4) The last two weeks have damaged Greece's economy, requiring a bigger bailout
Beyond Nordic distrust of Greece, another factor that could prevent a deal is that Greece needs a bigger bailout now than it did when Tsipras announced the Greek referendum two weeks ago. That's because the past two weeks have done serious damage to the Greek economy. Depositors have been bleeding Greek banks of cash, and commerce in the country has been grinding to a halt. It will take additional cash to recapitalize the banks and repair the damage to the Greek government's finances.
Greece had previously sought a €53.5 billion bailout package, but an assessment by the International Monetary Fund, the European Central Bank, and the European Commission estimated that it will now take €74 billion to get Greece back on its feet.
And some European leaders believe that if Greece needs a bigger bailout than it was seeking a few weeks ago, then it's going to have to make more concessions in return.
5) European negotiators may not reach a decision today
All week, European leaders have warned that this weekend could be Greece's last chance to remain in the eurozone. The 28 members of the European Union were scheduled to hold a summit on Sunday that would provide an opportunity to ratify a deal with Greece — if an agreement could be reached in time.
But then this formal meeting was abruptly canceled, presumably because European leaders hadn't reached an agreement on the terms of a Greek bailout. Instead, European leaders will resume negotiating behind closed doors to try to hammer out a bailout deal.
6) A German proposal would have Greece leave the eurozone temporarily
With little progress in negotiations yesterday, German Finance Minister Wolfgang Schäuble circulated a proposal for Greece to leave the eurozone temporarily. Schäuble has said that Greece may need to write down some of its debts, and that this was illegal under the rules of the eurozone. So Greece could move to its own currency, renegotiate with its creditors, get its fiscal house in order, and then potentially be readmitted to the eurozone.
But there are a lot of unanswered questions about this option. The euro was supposed to be permanent, so European law doesn't have a procedure for countries to leave the common currency. And once Greece suffers through the turmoil that would be involved in leaving the euro, it's not obvious why they'd want to come back.
CORRECTION: I originally described Slovakia as a Baltic country.
