Will Greek government follow through with austerity program?

Rick Moran
The coalition partners signed off on it. And the parliament approved it. But does that mean that the Greek government will actually implement the harsh austerity program they have had imposed on them by the EU?

Bisiness Week:

The doubts stem from growing concerns that Greece's economic problems are deepening and that the country's political leaders may not stick to the budget-cutting and reform promises they're making to receive the rescue. The concerns help explain why, after almost two years of frantic efforts to save Greece from bankruptcy, there is still wrangling over what needs to be done to secure Greece's position in the euro currency union and its economic future.

Circumstances have changed since the eurozone agreed on a first euro110 billion rescue for Greece in May 2010.

Some politicians -- especially in rich euro countries like Germany, the Netherlands and Finland -- have grown tired of Greece repeatedly missing budget targets and failing to implement promised cuts, reforms and sales of state assets. There are also concerns that the second, euro130 billion ($170 billion) bailout may not be enough to lift Greece out of its steep recession -- its economy shrank 7 percent in the final quarter of 2011 from a year earlier.

"There are many in the eurozone who don't want us any more," Greece's Finance Minister Evangelos Venizelos told the country's president, Karolos Papoulias, during a meeting to inform him of the latest developments.

Greece, Venizelos added, had to persuade the skeptics that the country could stay in the currency union and regain lost ground in reforming its economy.

"We are facing a situation that is particular because we are constantly being given new terms and conditions," the finance minister said.

To complicate matters, there are going to be elections in April. Given the strong opposition among voters to the austerity measures, it stands to reason that the party that can convince the largest number of voters that they will not implement some or all of the program will probably end up running the government.

If that is the case, all bets are off for the bailout and Greece likely defaults. They may do so anyway given the way their economy is contracting. But without the mandated measures from the EU, there will be no funds to pay creditors and a messy default will ensue.


The coalition partners signed off on it. And the parliament approved it. But does that mean that the Greek government will actually implement the harsh austerity program they have had imposed on them by the EU?

Bisiness Week:

The doubts stem from growing concerns that Greece's economic problems are deepening and that the country's political leaders may not stick to the budget-cutting and reform promises they're making to receive the rescue. The concerns help explain why, after almost two years of frantic efforts to save Greece from bankruptcy, there is still wrangling over what needs to be done to secure Greece's position in the euro currency union and its economic future.

Circumstances have changed since the eurozone agreed on a first euro110 billion rescue for Greece in May 2010.

Some politicians -- especially in rich euro countries like Germany, the Netherlands and Finland -- have grown tired of Greece repeatedly missing budget targets and failing to implement promised cuts, reforms and sales of state assets. There are also concerns that the second, euro130 billion ($170 billion) bailout may not be enough to lift Greece out of its steep recession -- its economy shrank 7 percent in the final quarter of 2011 from a year earlier.

"There are many in the eurozone who don't want us any more," Greece's Finance Minister Evangelos Venizelos told the country's president, Karolos Papoulias, during a meeting to inform him of the latest developments.

Greece, Venizelos added, had to persuade the skeptics that the country could stay in the currency union and regain lost ground in reforming its economy.

"We are facing a situation that is particular because we are constantly being given new terms and conditions," the finance minister said.

To complicate matters, there are going to be elections in April. Given the strong opposition among voters to the austerity measures, it stands to reason that the party that can convince the largest number of voters that they will not implement some or all of the program will probably end up running the government.

If that is the case, all bets are off for the bailout and Greece likely defaults. They may do so anyway given the way their economy is contracting. But without the mandated measures from the EU, there will be no funds to pay creditors and a messy default will ensue.