May be will it be next Monday? It’s the conclusion we can have after the failure of the negotiation between Greece and its Eurogroup partners (finance ministers of the Euro Area). This non-scheduled meeting was billed as a last chance for a compromise. There will be one more last chance Monday.

The most worrying in this meeting is its failure of course but also the lack of capacity to write a communique. One was written but Athens’ government, in a last-minute move, didn’t want to sign it. Everyone agreed on this communique including Yanis Varoufakis the Greek finance minister who was the Greek negotiator.

The arm wrestling between the Greek Prime Minister Alexi Tsipras and all the other European governments continue. The negotiation is twofold; one part is on the financial ground between Greece and Europe and it is an important one for Greece and also for the Eurozone survival; the other part of the negotiation is linked to the commitment between the Prime Minister and Greek citizens.
To be strong on the European side he needs a strong support from Greek people but to gain and keep domestic support he has to be strong in his negotiation with Europe.

There is another issue in the battle: I’m sure that he is persuaded that the Euro zone will not accept a Grexit (Greece exit) because it is too risky for every European country from Germany to Finland. Who really wants to take this risk as we don’t really know what would happen? Tsipras probably imagine that Europe has more to lose than Greece if at the end of the day the negotiation is a real failure.

To keep the Euro Area working well, there is a need to find a solution quickly as the deadline is February 28 and repayments for Greece in 2015 are large. On the whole year, Greece will have to repay about EUR 9.8bn to the IMF. The amount is almost homogenous during the year. It will have to repay EUR 6.7bn to the ECB (SMP portfolio). This will be in July and August. There is also a need to roll the short-term position. The government will have to roll EUR 14.5bn (1.4 to 2 per month). These Tbills are in Greek banks’ portfolio.

Greece needs to find a solution to avoid a default. This is really urgent as tax receipts are lower than expected and a failure could lead to a bank run.
A solution must be found before next Monday. It would avoid a situation of default for Greece and it will at the same time limit the risk of a persistent shock on Europe

It’s always possible to minimize the impact of a Grexit because of the size of the country. But we can imagine that in the case of a Grexit, the credibility of the Euro Area construction would be at risk. Who would like to take this type of risk? And who, outside Europe, would trust Europe?
Next Monday will be an important date for the Euro Area: it can be a new step of integration within the Euro zone but it can also be the first large and deep crack in the European construction