With six Cabinet members resigning in protest against an unpopular new austerity package, continued clashes between police and demonstrators in the streets of Athens and other major Greek cities, increasing pressure from Germany, France and other EU biggies, Greece finds itself faced with an uncertain future that could still lead to default and the consequent unravelling of the Euro zone. Greece must meet debt repayments of 14.5 billion Euros by March 20 to keep it head above water.
The proposed budget cuts amount to a whopping €3.3 billion (over and above the austerity measures already imposed on a population no longer able to bear the pain), and unless they are adopted, Greece could see the Troika made up of the IMF, the World Bank and the EU refusing another bailout package to keep it afloat. The Cabinet has approved the bill. It is now for Parliament to flag it through.
Despite the resignation of the six members and continued street protests, Prime Minister Papademos said a failure to pass the package could lead the country “down an unknown, dangerous path”. He fears, quite rightly, that Greece could face deeper recession and international isolation if it fails to act. Cracking the party whip, Mr. Papademos also warned dissenters they would not receive party tickets for the next general election which is almost certain to follow, even as early as April.
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The new measures will result in salary, pension and job cuts and are likely to hit the weakest and worst off members of Greek society. But politicians tried to argue their way out of a terrifying bind saying Greeks should consider what it would mean for the country to lose its banking system, to be cut off from imports of raw materials, pharmaceuticals, fuel, basic foodstuffs and technology.
EU officials are irritated at what they see as the great Greek double cross — a string of promises that have not been met. The EU has said it will not give Greece the next tranche of aid unless the country makes good on old promises and becomes serious about implementing reforms. They also want a promise that these pledges will be honoured regardless of which party wins the next election.