Wolfgang Schaeuble (in wheel chair)
Wolfgang Schaeuble (in wheel chair) Reuters

With Greece approaching a cliff from which it plunges from the euro, perhaps dragging other European countries along, while leaving substantial debt (estimated at €240 billion) to clear up, leaders of European Union are making one last ditch effort  - a combination of carrots and sticks.

The Europeans are hoping that the Greeks will somehow sober up from the rebellious spirit that they displayed in the inconclusive elections, which essentially rewarded the anti-austerity parties.

Now the consequences are beginning to kick in as Greek depositors scurry to remove their savings from the banks and industries, such as tourism (a mainstay of the economy), are being adversely impacted.

Tour packagers are holding up bookings as they are uncertain whether they will be paying in euros or in much cheaper Greek drachmas. Tourists are reluctant to travel to countries that expect trouble and given the strong anti-German current (one Dutch retiree age 79 was severely injured yesterday because he was mistaken for a German), the German tourists who frequented Greece in droves are staying away.

Ironically enough, the promise of carrots in the form of EU help to stimulate growth came from Angela Merkel after her meeting with the newly installed French president Francois Hollande. In the first meeting between Merkel and Hollande, the two leaders tried to reach a consensus to help influence the next Greek vote in June.  

Hollande was careful to avoid the impression that Europe was intervening in the Greek election. Hollande promised to respect the Greek vote "whatever it is". His job was to give the Greeks an encouraging signal that growth measures were on the way that would facilitate Greece remaining in the euro bloc.

The sticks came from the European finance ministers.

Swedish Finance Minister Andreas Borg warned that Greece was reaching the end of the road in terms of membership within the euro bloc. German Finance Minister Wolfgang Schaeuble said that the terms of the Greek bailout totaling €130 billion would not be renegotiated. Nor will there be further assistance until a government is formed that is capable of implementing the austerity measures.