GREEK DEBT CRISIS - LIKE A NEVER ENDING TV SERIAL....
By Ruma Dubey
The Greek tragedy has now become a saga; never ending and getting more and more painful by the day. At a time when some sense of optimism was returning to the markets, there came in news yesterday that the much awaited news on “Greece debt deal talks” did not really end up with anything conclusive.
The talks which were held yesterday, ended with EU leaders exchanging heated words, as Greece refused to accept Germany’s call to provide the second tranche of the rescue aid (expected to be in excess of €130 billion or $172 billion) if it allows to establish an “overseer” or supervisor who will take control of the Greek Budget. Naturally, Greece is not in any mood to allow its sovereignty to come under any challenge. Greece needs to meet a 14.5 billion-euro bond payment due on March 20. To get a bail out the country is not willing to let go of its fiscal independence as a country.
It is like an errant child, who does not know how to spend its pocket money and spends more than what was given, leaving its parents to pay the bills. It is but natural that the parents will then take control of the child’s spending habits and keep a close monitor to prevent such an occurrence from happening again. But what if the errant child is a fully mature person, with a spouse and children in tow? Can the parents then exert their authority to that extent? Well, Germany here is not the parent; we could term it only as a well-to-do-sibling by virtue of being a part of the EU zone family. Thus Greece, despite being in a financial mess, not wanting to relinquish its sovereignty is understandable. And this is how the much awaited debt talks with Greece ended without any conclusion.
The Big daddy of EU, Germany was quick to issue a warning to Greece that it has better behave; the German Finance Minister issued an unusually blunt warning that the EU might refuse to grant Greece a fresh bailout, pushing Athens into default unless it persuades Europe it can overhaul its state and economy.
All eyes are now on the EU summit being summit being held in Brussels. The agenda of the Summit is to discuss about how to improve economic growth in the 17-nation euro area. There is also talk that the EU leaders, at the Summit, were to pledge to retarget unspent subsidies and consider boosting the lending of the bloc’s project-financing arm. But it is likely to get pushed under the carpet for now as the Greek bailout is expected to overshadow everything else.
French President Nicholas Sarkozy is optimistic. He said, “We can say with caution that we see elements of financial stability in France, in Europe and in the world. Europe is no longer at the edge of the cliff.” Call it “election talks” or whatever; this optimism will undergo a litmus test this week as EU nations including Italy, Belgium and Spain sell about 22 billion euros of debt securities.
Greece now requires 145 billion euros for the second bailout, 15 billion euros more than was agreed in October. Unless an amicable solution is reached to bailout Greece, uncertainty and instability is markets all over the world is expected to continue.