As if Athens' political vacuum weren't enough, Greece is also weighed down today by 436 million euros of sovereign bonds to be repaid to international creditors. As for the institutional crisis the leaders of the three main parties (New Democracy, Syriza and Pasok) they will reunite again this tuesday with the President of the Republic Karolos Papoulias, to discuss the possibility of technical government, given the failure of the attempt to form a government of broad understandings. "We have no other choice," said socialist leader Evangelos Venizelos. The alternative would be to call new elections, on a possible date between 10 and 17 June.
But this Tuesday is bad for Greece for another reason as well. Indeed today 436 million bonds expire in the hands of the 3% of creditors who have not adhered to the debt conversion last March. The pact agreed with private individuals, which allowed Athens to get rid of 100 billion of public debt, had been labeled "controlled default" precisely because the creditors had "voluntarily" committed themselves to extending the deadline. But the bonds due today were issued in London and if Athens decides not to pay, the "default" request will be triggered. However, there is a particular clause in these bonds which grants the Greek state a grace period of 30 days (and not 7 as in other sovereign bonds) to meet its commitments: if Athens did not pay, the default would only take place in a month. And in 30 days, anything can happen.
But not paying creditors is a shrewd choice from the point of view of the state: 436 million would weigh enormously on the by now almost empty Greek treasury coffers, which count for 1,9 billion euros in all. A disbursement of this size risks having repercussions in an insufficiency of funds to pay pensions and public salaries in the coming months. Considering the social fire that has been burning for almost a year now and the vacuum at the top institutional levels, it is difficult to imagine who and what choice decides to make.
Then there still remains the problem ofcontagion effect on the countries of the euro area. It is probable that if Greece chose not to repay its creditors, investor sentiment would worsen, affecting all European stock markets, which already the uncertainty of Athens has been paying for days.
