By the next Eurogroup scheduled for June 18, it is likely there will be an agreement between the Greeks and their European partners. By the end of June, Europe will slow-down as the long summer vacation will begin, until the mid of August. Therefore an interim solution will be found until September. Then, as my Italian friends say, “chi vivrà vedrà.”
Europeans, in particular the Germans, are fed-up with the Greeks and the Greeks have come into a deadlock with no way-out.
What kind of agreement they will conclude does not matter because both sides are well aware that no matter what terms will be set and how the agreement will be named, it will not be honored. The Greeks have no more money and all activities that could produce taxable income have ceased.
Therefore, the way out would be for Greece exit the Eurozone.
However, this is out of question, as it would probably mean the end of the Eurozone. Indeed, neither Europe nor the world economy can afford it. Nobody can take, just for the shake of discipline, the risk returning the western world to the Great Depression of 1929 and let China and Russia take over.
Back to square one: assist Greece.
This is not easy. Europeans not only do not trust Greek politicians but they want to severely punish the present Leftist government in order to discourage Europeans from voting for similar governments in other places like Spain, France or Italy.
Under the circumstances, the EU is not left with many alternatives. It will have to pay (directly?) Greece’s foreign obligations and let the government sort out its domestic problems.
Then, the EU will have to wait for the situation in Greece to come into total collapse and with the new situation that will emerge, assist and restructure the country and its debt. When the Greeks will deliver substantial reduction of the size of the public sector, abolishment of the various cartels and the privileges distorting the free market and when the Greek economy will be deregulated so to make investing in Greece worth, then the European may cancel a substantial part of the Greek debt.