The debt crisis in Greece is increasingly turning into a Greek tragedy, in both the literal and figurative sense, as Euro-zone finance ministers emerged from two days of discussion at the Luxembourg Summit to announce that the next tranche of aid to Athens would not be approved until the Greek parliament passes new austerity measures.
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According to Carsten Volkery of Spiegel Online,
“Observers had been expecting that the ministers would at least approve the next tranche of aid, worth €12 billion ($17 billion), from the current €110 billion package that was agreed on by the EU and International Monetary Fund in May 2010. Greece needs the money by mid-July at the latest to avoid a national default.
The announcement comes as Greek Prime Minister George Papandreou scrambled to gain approval for the austerity measures, from both the parliament as well as the general populous.
On Sunday, Prime Minister Papandreou made a public appeal for the nation to accept measures that would inevitably hurt most citizens in the short term.
"The consequences of a violent bankruptcy or exit from the euro would be immediately catastrophic for households, the banks and the country's credibility,
" he said.
In the meantime, most experts view the Euro group’s – a collective term to describe the Euro-zone finance ministers – decision as a delaying tactic meant to put even more pressure on the Greek policy makers and their citizens.
Jason Manolopoulos, an Athens-based fund manager and co-founder of Dromeus Capital, told the BBC
, “All the parties – the Germans, the Eurozone, the European Central Bank (ECB) and the Greeks – are playing a game of chicken.
They each have different goals. The Greek government is trying to protect its sovereignty; the ECB is trying to preserve its credibility, while several nations involved are thinking about their electorates.”
The Eleftherotypia newspaper in Greece was far more critical of the political game being played by the various parties, describing Greece to be “at risk of becoming Europe’s little whore.”
The latest announcement is bound to fuel further speculation that the Eurozone is heading towards a breakup.
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Centre for Economics and Business Research chief executive Douglas McWilliams told the BBC, "sooner or later both the Greek population and international creditors will tire of fighting a loosing battle, leading to a break-up of the currency union as Greece pulls out, probably followed by other countries. A series of bail-out packages and eventual debt restructuring will delay this moment, but it will come.”
For the moment though, consumer confidence in Greece remains extremely low as most Greek remain very pessimistic about their nation’s economic prospects in the next six months.
Read The Full Article at Spiegel Online