What will Greece do next and what can it do?

Greek prime minister Alex Tsipras intends on staying in the Eurozone, but will the rest of Europe accommodate him?

a woman

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It seems clear what Greece want to do – the only problem that stands in their way is the rest of Europe.

Greek prime minister Alex Tsipras clearly intends heading back to the negotiating table to discuss the country's debt problem with the European negotiators, armed with the backing of the whole of Greece. The resignation of finance minister Yanis Varoufakis yesterday, who was widely unpopular with other Eurozone members, is also intended to help the negotiations.

Clearly, Greece is aiming to remain in the Eurozone and keep the Euro as it currency. Anything else is quite frankly, too difficult to contemplate. Reverting to the Drachma could see Greece dissolve into anarchy and that's the last thing Greeks and Europeans alike want.

The problem Greece faces, as I outlined here, is its mountain of debt currently standing at €320 billion, or 180% of GDP and continues to grow. The country missed a debt repayment last week, so technically has defaulted on its debt repayments. But it's virtually impossible for Greece to repay that amount of debt. Mr Tsipras reportedly wants the Eurozone to chop its debt pile by 30% at least and delay repayments so that the Greek economy has some breathing space to undertake structural reform.

Greece needs it.

Pensions are too high and begin too early as I've mentioned before. The tax system is in disarray and even collecting tax has become a major issue. Unemployment stands above 25%, with youth unemployment reportedly running at 50%. That's one in every two people without a job. To fix that the company needs investment to create jobs – foreign investment most likely – but who's going to invest there now?

While the Eurozone and lenders have demanded Greece begin to fix some of its issues, the country has been slow to act. So much so, that many European countries and their respective leaders have had enough. Their view is that Greece has had five years to implement reforms and hasn't gone near enough. German chancellor Angel Merkel has taken a hard line so far, with many Germans unwilling to support any new bailouts of Greece.

The problem Greece is trying to get the Europeans to understand is that the austerity programs introduced in 2010 and 2012, insisted upon by the International Monetary Fund to qualify for aid, just haven't worked.

The short-term problem for the country and its people is that Greece is virtually insolvent. Banks are running out of money, despite limits imposed on ATM withdrawals. If Mr Tsipras can't find a resolution soon, Greece's banks will have no choice but to begin issuing a new currency – drachmas – a move that will see it drop out of the Eurozone.

That option is drawing ever closer.

Motley Fool contributor Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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