May will be the critical month for Greece : Stratfor analysis

May will be the critical month for Greece : Stratfor analysis

Athens, February 24, 2016/Independent Balkan News Agency

By Marina Spyropoulou

May is the month Greece will need to cross the Rubicon, as the now interlinked refugee crisis and future of the bailout program will reach a critical point, the intelligence firm Stratfor predicts in a recent analysis.

The Greek government is once again fighting on multiple political and economic fronts. Athens is negotiating the continuity of the bailout program while also pushing to avoid its suspension from the passport-free Schengen area.

Negotiations with the European Union and the International Monetary Fund temporarily ended earlier this month at an impasse.

“The creditors seem relaxed. Not so Athens, which is slowly running out of time and money,” the authors of the report noted.

Greek officials recently said Athens has enough resources to continue functioning without aid until at the latest June. And though Greece’s debt maturity calendar is not as pressing as it was in 2015, Athens must still repay approximately 2.3 billion euros to the European Central Bank in July.

Without the next tranche of bailout loans, Athens could struggle to make it, refueling default and Grexit scenarios.

Meanwhile, Athens has more urgent problems to deal with. On February 12, the European Union gave Greece three months to present and implement plans to cope with the refugee crisis or be suspended from Schengen.

In recent weeks, Athens has shown Northern Europe it is willing to cooperate. But given that the European Union is failing to cohesively respond to the migration crisis, countries and groups of countries have decided to take regional and bilateral measures to sever the Balkan migration route that connects Greece to Austria and Germany, Stratfor analysts stressed.

And if the European Union decides by the May deadline that Greece is not doing enough to protect its borders, Brussels could allow Schengen members to introduce border controls in the area for up to two years.

Tighter border controls along the Balkan route will create problems for Greece, since migrants will have a harder time moving north.

EU threats to suspend Greece’s membership in Schengen will probably weaken popular support for the bailout program which is already controversial, the intelligence firm underscored.

“Greece’s domestic and foreign problems are deeply intertwined. There should be an agreement of pension reform in the coming weeks because Athens’ progressively weakening financial situation will make it more willing to make concessions to the creditors, though the relief the agreement provides will be temporary,”

The migration issue will not go away so easily. Border controls along the Balkan route are likely to remain in place, regardless of what is decided in Brussels about the future of Schengen. Countries will also continue to introduce measures to become less attractive to migrants. But with the crisis in Syria still far from over, migrants are likely to simply look for new ways to reach Northern Europe.

“The key month to watch is May, when a formal suspension from the Schengen Agreement could trigger a political crisis in Greece that could derail the continuity of the bailout program,” Stratfor warns.

 

Photo: Stratfor.com