Rather than immediately approve the release of $17 billion to help Greece pay its bills, the group of countries who use the euro, known as the Eurozone, has placed further conditions on continuing financial assistance. “After several hours of talks, finance ministers from the 17 countries that use the euro said they would release the funds only if Greek lawmakers approve a controversial program of tax hikes and spending cuts to slash the country’s mammoth budget deficit.” If Greece follows through, the bailout funds would become available in July.
What’s the Big Idea?
Eurozone countries are wary of releasing more bailout funds to Greece because it continues to be unable to meet its short-term financial goals, goals which were the conditions of the first bailout package given last year. The prospect of Greece defaulting on, or “restructuring” at least some of its debt seems likely. Declines in world markets would probably follow. Greece’s Prime Minister George Papandreou faces a no-confidence vote tomorrow where he will present his new government to the legislature. If he survives, he must push through austerity measures. If he doesn’t, Greece will face a new political crisis.