Leaders of European nations have increased pressure on Greek leaders to meet the terms of a USD 171 billion bailout, telling them that time is running out.
Nicolas Sarkozy, President of France, met the Chancellor of Germany, Angela Merkel in Paris while the temporary Prime Minister of Greece, Lucas Papadamos is preparing to deal with the troika of foreign lenders in Athens for the second time. A meeting of Greek party leaders was postponed until the next day as they strived for a more coordinated response.
Considering the stability of Greek on the line, a temporary agreement among the political leaders in a measured framework marked a little step forward while Athens facilitate the domestic and international dealings. This is while it persuades Greece’s creditors to receive the bigger write-offs on their debt holdings.
Two of Europe’s biggest economies proposed creating an account for interest payments of Greece, guaranteeing lenders will get paid. In a later interview, Sarkozy announced that he is working with Merkel to avoid a Greek default.
Sarkozy said that permitting Greece to go into bankruptcy is not an option. He added that the government should carry out its accountabilities and do a reform to gain community money.
Moreover, there has been added pressure on the political leaders as ADEDY and GSEE (biggest union groups in Greece) hold a one-day general strike, protesting the measures that can include a reduction of minimum wage and pensions as well as many layoffs of government employees.
Papademos, along with other leaders, have agreed to provide more reductions this year amounting to 1.5% of GDP in the 5-hour meeting the other day.
Papademos should hear the global demands for bigger austerity to finish the talks on a second plan on time, as they face general elections on April and a 14.5 billion-bond payment on March. Questions include how much more help Greece requires, how much austerity is needed, and how to include the ECB in private-sector creditor debt change.
However, one thing is quite clear: the Greek crisis still continues to unfold. The worst case scenario for the Eurozone is a Greek default.
Greece might be burdened with much debt even after the second bailout. It also suffers from very little development and very large budget deficit, making European nations like Germany think twice about offering help