Greek parliament approved austerity bill, but obstacles remain

The austerity bill was one of the three conditions to secure EU – IMF bailout. The other two conditions – 325 mil. euros of this year´s budget cuts and commitment of all main political parties to carry on reforms after this year´s elections – are questionable.

Question:

Do you think eurozone will drop back a bit and approve bailout in case one of these conditions is not satisfied or is fulfilled only formaly?

Miguel Otero-IglesiasAssistant Professor in International Political Economy, ESSCA – School of Management, Centre for European Integration

I actually think that the Greek political establishment will meet the other two demands of the Troika (i.e. further budget cuts for this year and a written commitment to reforms). What other option do they have? Disorderly default? This would be extremely reckless, because the political and social consequences could potentially be devastating.

What we have here is the usual arm-wrestling negotiation/tension between creditors and debtors. The creditors need to get their money back but cannot squeeze too much the debtors because that can end up badly for both, while the debtors need to pay back their debts so as to not lose face but are also encouraged to protract the repayment because they know that the creditors have much to lose if they allow the debtors to default.

This is a dangerous game that is always played at the edge of the abyss. As I can see that the Troika and the other European partners of Greece are not happy about the lack of reforms and the not-fulfilment of previous promises, that’s why they have adopted a tougher line (i.e. “you accomplish what you promise or we do not bail you out”). That’s why I think that the Greek political elites will agree to the demands, at least on paper, we will see what happens with the implementation. There I am less convinced. The other option would be for Papademos to threaten with a disorderly default and then see what the Troika decides. But, what if the Troika decides, that Greece should go under…?

At  the end of the day, it is difficult to see who will have the upper hand in this poker game. The sad thing is that a lot of people, most of them innocent ordinary people, will have to suffer while this game goes on.

Roman Gerodimos, Senior Lecturer in Global Current Affairs, The Media School, Bournemouth University

At the moment it’s impossible to predict what will happen – not least because Eurozone finance ministers are not united in their attitude towards Greece. It’s quite clear that many leaders and technocrats, both in Brussels and around the Eurozone’s capitals, have decided that Greece has to be left to its own devices, even if that means declaring a default or even leaving the Euro. They are looking for an excuse to deny Greece the bailout package and sadly Greek politicians may offer them that excuse. Having said that, the movement supporting Greece’s role within the Eurozone is not negligible. I feel that this will be one more extremely difficult negotiation. It would be foolish of me to make a prediction, but my gut instinct is that some sort of agreement will be reached. However – and while such an agreement is absolutely vital – I’m not yet convinced whether it will be enough to put Greece back on a path of growth and sustainable development.

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