Greece's future in the eurozone is the subject of a crucial meeting in Brussels later as violence erupted in Athens.
The so-called Eurogroup, made up of the 17 countries which use the single currency, will discuss whether the Greek government has done enough to trigger a second 130bn euro bailout.
In a sign of just how seriously the beleaguered nation is taking the gathering, Greek leader Lucas Papademos will accompany his finance minister Evangelos Venizelos.
Senior government sources told Sky News his presence there is in case "decisive decisions for the country need to be taken".
Last week, the coalition government withstood a cross-party rebellion over a 3.3bn euro austerity package, which slashes 15,000 public sector jobs this year alone, cuts the minimum wage by 22% and trims spending from defence and health budgets.
A laser pointer shines on a policeman's face during Sunday's protests in Athens
However, even these measures were not considered to be enough by certain hardline countries within the eurozone, particularly those which have the strongest credit ratings in the EU.
Finland, Austria, the Netherlands and Germany asked for further assurances from Athens that the savage cuts will continue to be implemented after the general election, which is likely to be held this spring.
Political leaders signed letters to that effect last week, but not before Wednesday's meeting of the Eurogroup was cancelled, suggesting patience in Brussels was running low.
US Treasury secretary Tim Geithner said America would encourage the International Monetary Fund to support an agreement on Greek economic reform implementation.
On the weekend, another piece of the jigsaw required to release the bailout fell into place, although it still has to be signed off by the Eurogroup.
Negotiators for private holders of Greek debt, including banks and hedge funds, have agreed to take a massive loss on the bonds they hold in order to reduce the country's debt mountain.
In exchange, they will receive bonds of a lower value and cash sweeteners in a restructuring deal which has now been scheduled for between March 8 and 11.
That is just over a week before Greece has to service a bond redemption of 14.5bn euro. At the moment, it does not have the money.
More than 40 members of the ruling Greek coalition refused to back reforms
Failure to settle its debt would be considered a so-called credit event, where insurance policies - credit default swaps - would be triggered.
That could start a chain reaction similar to that seen after the collapse of Lehman Brothers in 2008.
The fear for Mr Papademos is that some of the countries around the table today have decided a big enough buffer zone has been built around banks and countries exposed to Greek debt to withstand a default.
Meanwhile, amid a recent upsurge in violence in Athens, further scuffles occurred on Sunday evening as protesters engaged in running battles with riot police outside parliament.
On Tuesday, union members affiliated with the communist party are expected to hold their own protest rally and march to parliament.
Sky News
No comments:
Post a Comment