The never-ending Greek crisis witnessed a dramatic acceleration last week: the government submitted a list of proposals, the troika (the IMF, the European Commission and the European Central Bank) came back with a list of its own, the Greek side rejected them out of hand, a parliamentary debate followed in Athens during which the prime minister repeated the rejection, and finally Greece failed to make a scheduled payment to the IMF on 5 June, presumably bundling all its payments for the end of the month.

After five years of catastrophic failure, there is a sense that the crisis is about to reach a denouement, perhaps involving default and exit. There is frustration among the population with what is perceived as the unbending attitude of the lenders. But there is also deep concern regarding the implications of default and exit.

The proposals by the Syriza government represent a painful compromise compared to its electoral promises. It has accepted tight fiscal targets, and to achieve them it is offering to raise VAT on several goods, while also imposing a substantial tax burden on the rich, thus achieving some redistribution. It has also toned down its policies on privatisation and pensions. In return it is asking the troika for an immediate injection of liquidity, as well as for a serious commitment to reduce Greek debt and to promote long-term investment. There is hardly anything revolutionary, nor even particularly radical, in these demands.

The response of the eurozone creditors, judging by a leaked “official” document, has been ruthless. They have set fiscal targets slightly above those of Syriza, but to achieve these they are demanding a substantial increase in VAT, including a rise of 10% on electricity, thus hitting the poorest where it hurts. They are also demanding the abolition of subsidies and tax relief measures (including for farmers and poor pensioners), and pension cuts. Finally they demand an end to collective bargaining, no increase of the minimum wage and sustained privatisations.

These are familiar measures proposed by the IMF on many occasions across the world. They represent failed and outdated economic thinking, and are likely to mean low growth, high unemployment and low incomes. Even worse, the troika is making no suggestions regarding the settlement of debt and future investment.

These are familiar measures proposed by the IMF on many occasions across the world. They represent failed and outdated economic thinking, and are likely to mean low growth, high unemployment and low incomes. Even worse, the troika is making no suggestions regarding the settlement of debt and future investment.