Greek debt crisis: Old obstacles remain unresolved, new impasses have arisen.

(Baonghean) - Protests against austerity policies have resumed in Athens, Greece, over the past few days as the government considers accepting new reform measures in exchange for an international bailout package. Nearly 10 years have passed, and the path to Greece's recovery from crisis remains very uncertain. For various reasons, international partners have no choice but to help the Greek economy avoid collapse.

Forced circumstances

As expected, Greece and its group of international creditors, including the Eurozone and the International Monetary Fund (IMF), are discussing the next steps as Athens faces a €7 billion debt maturing this summer.

The worst-case scenario is that Greece will be unable to repay its debt if creditors do not activate a new disbursement from the 86 billion euro third bailout package. Because of the deadline and stringent conditions, the negotiation process has become incredibly difficult, making compromise hard to achieve. Despite everyone understanding that if Greece collapses, no one will benefit, and the disintegration of the Eurozone is almost inevitable.

German Chancellor Angela Merkel and IMF Managing Director Christine Lagarde may be able to find a compromise on a solution for Greece. Photo: Guardian

The problem is that Greece's debts are all due. This means that without concessions from both the debtor and the creditors, it will be very difficult to resolve the difficult situation. The IMF – a key partner in the Greek debt resolution process – has not yet officially joined the third bailout package with the Eurozone due to some disagreements. The IMF has warned it will withdraw from the bailout program for Greece because Athens' debt is too large. Meanwhile, the economic targets set by the Eurozone for Greece are unrealistic.

Therefore, this global financial institution believes it can only continue disbursing loans if Eurozone countries commit to further debt reduction for Greece before releasing new bailout funds. According to the IMF, even with full implementation of the required reforms, Greece still needs to significantly reduce its debt to achieve sustainable growth and budget targets. However, this condition faces strong opposition from Germany and many creditor countries in the Eurozone.

On the Greek side, Prime Minister Alexis Tsipras's government also has no other option. The €7 billion debt due in mid-July is a huge challenge if a compromise with creditors isn't reached. For almost two years, Greece has implemented reforms and made budgetary commitments. However, the "gift" or new bailout will not be disbursed until Greece passes the current assessment. If all those conditions are met, Greece will again have to rely on luck.

The problem is that Germany and the Netherlands will only agree to continue if the IMF is fully involved. So, the old hurdle remains unresolved, and a new impasse has arisen. This time, the IMF is demanding further austerity measures from Greece, despite remaining skeptical about the budget targets set by Europe. This is tantamount to the Athens government stirring up domestic opposition to austerity measures.

Key point with the EU

Following last year's vote by British voters on Britain's departure from the EU, the EU is now facing a new test. The outcome of this test will determine whether Greece remains in the Eurozone. If Greece goes bankrupt or no longer qualifies for the Eurozone, its departure from the EU, like Britain's (Brexit), will only be a matter of time.

But if no agreement is reached between now and July, Athens will inevitably default. So far, Greece has no other option than the "lifeline" of the EU, the European Central Bank (ECB), and the IMF. And all three institutions seem exhausted trying to resolve the evolving Greek debt crisis.

To date, they have spent 310 billion euros to help Athens escape its predicament. They are also forced into a "go with the flow" situation, unable to abandon Greece in its time of crisis. But helping this time doesn't guarantee they won't have to help again. Given the conditions set by these three creditors, it's clear that Greece hasn't met them seriously. This is simply due to pressure from public opposition, alongside the need for political stability to change the economic and financial situation.

Greek farmers protested against new taxes in an anti-austerity demonstration last week. Photo: New York Times

But the problem for the EU doesn't just lie there. Within the bloc, there are differing views on how to handle Greece's debt: should they reduce Greece's debt or meet the requirements for the IMF to join the EU and the ECB? For example, Germany has the most steadfast position in the Eurozone on significantly reducing Greece's debt as proposed by the IMF.

Along with other countries like the Netherlands, Berlin has made the full participation of the IMF a condition for participating in the Greek bailout. Germany fears that the EU alone will struggle to maintain pressure on Greece to implement reforms. If the IMF remains outside the Greek bailout program and only imposes conditions, German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble will be put in a difficult position just months before the September elections.

Discussions surrounding the restructuring of Greece's public debt are still ongoing. Now, all parties need to compromise and take more concrete action if they want to resolve this long-standing debt problem. After all, no one wants the Athens debt crisis to become the final straw for the EU's survival.

Thanh Son