Current Magazine

Eurozone Debt Crisis: Greek Debt Talks Postponed Again, Fears of Greek Default Swell

Posted on the 06 February 2012 by Periscope
Eurozone debt crisis: Greek debt talks postponed again, fears of Greek default swell

Angela Merkel (centre) and Nicolas Sarkozy (right). Photocredit: European Council

Greece’s political leaders have delayed their decision on accepting the terms of the new EU/IMF bailout for yet another day. The three parties in the Greek coalition government, who have been arguing for weeks over another wave of austerity in return for the 130 billion euro bailout, were unable to come to a decision yesterday despite knocking their heads together for five hours and postponed today’s decision until Tuesday.  The further delay has deeply frustrated German Chancellor Angela Merkel and deepened concerns that Greece might default, an event that would further rock the shaky eurozone.

Speaking in Paris, Merkel expressed the exasperation at seemingly endless wrangling in Athens that has yet to produce a definitive acceptance of the austerity and reform conditions demanded by the lenders. “I honestly can’t understand how additional days will help. Time is of the essence. A lot is at stake for the entire euro zone,” she told a news conference with President Nicolas Sarkozy.

“We want Greece to stay in the euro,” said Merkel. But she added: “I want to make clear once again that there can be no deal if the troika proposals are not implemented. They are on the table … Something needs to happen quickly.”

Greece is facing 14.5 billion euros of debt repayments in March, a bill it cannot meet without further bailout funds, so “the stakes could not be higher” noted Reuters.

Domestic politics at play? Lefteris Papadimas and Daniel Flynn of Reuters drilled down in to the reasons for the delay and suggested that Greek politicians might be delaying so as to curry a little favour with voters who are sick and tired of austerity measures: “The party leaders, positioning themselves for a likely general election in April, have baulked at accepting another package of deeply unpopular wage and pension reductions, job cuts and tougher tax enforcement measures.” The news agency reported that some left-leaning political parties are simply flat-out opposed to accepting more austerity pain: “New Democracy and LAOS in particular have staunchly opposed further wage and spending cuts, arguing they risk precipitating an even deeper recession and imposing more pain on Greeks.”

Unpalatable austerities. The BBC said that disagreements over the size of job cuts, cuts to the minimum wage, pension cuts and the ending of a so-called 13th or 14th month’s pay as a holiday bonus are proving to be the big stumbling blocks. The BBC reported that anti-austerity protests are expected to take place on Monday evening and that the two largest unions have called for a day-long strike on Tuesday.

Euro sliding. At 1600 GMT on Monday, The Wall Street Journal detailed how the postponement is impacting on the currency markets. The  newspaper reported that the U.S. dollar rose, while the euro fell for a third day “as Greece struggled against the clock to cut a deal with its international creditors for a second bailout seen as essential to averting a messy default.”  In recent trade, the newspaper reported, the euro was at $1.3075 compared with $1.3159 late Friday. Looking forward, currency specialists polled by the WSJ painted a pretty gloomy picture: Even “if a deal is reached, we think it will likely be the high point in terms of good news in the euro-zone debt crisis,” said Brian Dolan, chief currency strategist at “Markets are likely to conclude that even with a deal, Greek debt levels are still unsustainable in the long run.”

More on the economy

  • RBS boss Hester turns down massive bonus
  • Eurozone debt crisis continues to deepen
  • Will David Cameron really legislate on fat cat pay?
  • Is the UK economy doomed?

You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • A Look at the Greek Language

    From here.A look at the Greek language from the POV of how hard it is for an English speaker to learn it. The truth is that Greek is a very hard language to... Read more

    The 22 August 2013 by   Calvinthedog
  • Un-Plan Your Planned Greek Stay

    Here's a conundrum for you. When does the best planned holiday consist of an unplanned stay? Now isn't that a secret worth disclosing? I have always had two... Read more

    The 01 October 2013 by   Raghavmodi
  • Crockpot Greek Vegetables

    I have been doing pretty good on my goal of using the crockpot more, this time for a meatless meal. This one is easy to do on high for 3-4 hours and be done,... Read more

    The 05 November 2013 by   Fitnspicy
  • Review: Liberté Strained Greek Style Yogurt Blueberry Harvest

    As an all round yogurt fan, I've tried out a few different brands of the newly popular super thick strained yogurts, such as Fruyo (review here) and Danio... Read more

    The 16 October 2013 by   Grocerygems
  • Things I Wish I’d Known About Greek Ferries

    Thinking about visiting one of Greece’s gorgeous islands? (Santorini is a stunner.) You’ll probably be taking the ferry, in which case there are a few things yo... Read more

    The 27 August 2013 by   Eemusings
  • Ian Anderson Talks Greek Mythology

    Greek mythology is one of those ancient things that we often study in high school and then forget by the time we're in college. Read more

    The 25 October 2013 by   Selane
  • Greek Comedian Katerina Vrana – She’s Not Cheesy, Just Getting Feta and Better

    Scotland, England, Australia, Greece and America?I missed Katerina Vrana’s show Feta With The Queen at the Edinburgh Fringe in August, but I caught up with it... Read more

    The 12 November 2013 by   Thejohnfleming

Add a comment