Greece Reality Check
Euro Crisis Worsens as EU Leaders Play for Time
Greek Prime Minister Georgios Papandreou (L) with French President Nicolas Sarkozy (C) and German Chancellor Angela Merkel (R) at an EU summit in February.
If the governments continue to refuse to agree to a debt haircut, Greece will need new help from its partners by next year at the latest. Last Monday, Schäuble told the CDU's executive board that he planned to "stand firm" against such plans for the time being. But in the end, he added, there would be no alternative but to approve additional billions in loans to Athens.
The reason: Without new liquidity injections, the Greeks will have no access to scheduled funds from the IMF, which can only pay out the next tranche from its bailout package if the country can demonstrate that it can service its debts in the coming 12 months.
A joint team from the IMF, ECB and European Commission is currently scrutinizing the progress of the Greek austerity program, but it is already clear that the Greeks are not likely to fulfill the requirements.
Not surprisingly, the mood is tense. Despite all the negative reports, Chancellor Merkel intends to wait until the experts who are now reviewing the situation in Athens have compiled their report. For this reason, she angrily informed European Commission President José Manuel Barroso during his visit to Berlin last Wednesday that she considers the talk in Brussels of new billions in aid to be more than premature.
Meanwhile, a feeling of resignation is taking hold in Greece. When Prime Minister Papandreou announced his rigorous austerity and restructuring program a year ago, he was still confident of having the support of a majority of the population. For many Greeks, the crisis was even an opportunity to finally put an end to an economy that had been based on debt and privileges for decades.
Some Greeks Warming to Idea of Euro Withdrawal
But now large segments of the population favor a quick fix, like the one Vassilis Sarantopoulos, 50, the head of a small Greek publishing company, recommends. The "solution" to Greece's debt crisis is obvious, says Sarantopoulos: "Withdrawal from the euro zone, return to the drachma, non-recognition of the government debt."
This, he says, could "help everyone, Greece and Europe alike."
Sarantopoulos is sitting in Café Kastro in a suburb in northeast Athens, savoring the silent admiration of his friends. He is one of the advocates of a new movement in Greece called "I Won't Pay." The name speaks for itself.
Its members are refusing to pay the price for the crisis. They are hampering the operation of tollbooths on the expressway, taping over coin slots on ticket machines for buses and trains or simply dodging fares. They plan to call for resistance to a patient fee for visiting doctors and they want to organize a tax boycott. The movement already has at least 10,000 members, its organizers claim, noting that "a new committee is added" every day.
A new rage is erupting at the foot of the Acropolis. It includes a few young anarchists, who marched through the streets of Athens throwing stones last week. But most members of the "I Won't Pay" movement are ordinary middle-class people or the unemployed.
They believe that politicians and bankers caused the crisis and should therefore solve it. "This is your crisis, not our crisis," their slogan reads. According to opinion polls, 26 percent of Greeks are now opposed to the European bailout funds.
In the government too, the front opposing a national bankruptcy is crumbling. Former Environment Minister Vasso Papandreou is now openly criticizing her fellow member of the Panhellenic Socialist Movement, or PASOK, Finance Minister Papakonstantinou, saying that he "has no overall plan."
Mimis Androulakis, also a member of PASOK, says that his own government is pursuing an "erroneous treatment concept." And Petros Economou, a fellow member of the PASOK parliamentary group, even believes that the austerity measures have in fact exacerbated the Greek debt problem.
Greek EU Commissioner Maria Damanaki, however, is appealing to her fellow Socialists in the Athens government to tighten reforms even further. "Without radical reforms for a leaner, cheaper and better functioning government, Greece will never see light at the end of the tunnel."
Loss of Faith in Bailout Strategy
Many in the European lender nations, including Germany, are beginning to lose faith in the current bailout strategy. Last Tuesday, displeasure within the CDU/CSU parliamentary group became apparent when CSU parliamentary Peter Gauweiler ridiculed the German government's approach, saying: "The energy concept, the euro rescue -- now we can put everything we decided on last year in a box and write on it: not applicable."
There is growing distrust, particularly toward the so-called European Stability Mechanism (ESM), with which Europe plans to support other crisis-ridden countries like Portugal and Ireland in the future. "The depressing news from Greece shows that the current approach to rescuing the euro isn't working," says CDU parliamentarian Marco Wanderwitz. "This doesn't make approval of the ESM any easier."
Without a sustainable solution for Greece, the other bailout funds won't work