The junior coalition partner in Greece’s interim government has pledged its support for the country’s international bailout, but it remains unclear whether Athens will get more money to avoid going bankrupt next month.
European Union leaders this week demanded that Greek conservative leader Antonis Samaras sign a written agreement supporting Greece’s austerity measures, and vowed not to release an $11 billion segment of Greece’s 2010 bailout without it. Samaras sent the letter Wednesday, but hedged on a full commitment to the austerity plan, leaving release of the funds in question.
Samaras said his New Democracy party is “strongly committed” to Greece’s reforms. But he added that “certain policies have to be modified” to be successful, especially since Greece is the only European nation projected in 2012 to be in a recession for a fifth straight year.
The Greek central bank warned that the country is facing its “most critical period” since World War Two and must act quickly to impose spending cuts and tax increases demanded by the country’s international creditors. The Bank of Greece said the $182 billion in new loans offered the country, in addition to forgiveness of $135 billion in old debt, may be the last opportunity for the country to save itself from economic collapse.
The long reach of the European debt crisis also hit Germany, the continent’s strongest economy. It failed to raise as much money as it hoped in its latest bond auction, failing to find buyers for 35 percent of the 10-year securities it offered. The government blamed the “extraordinary nervous market environment” surrounding the debts of financially troubled European governments for the lack of interest.
The EU called for the introduction of eurobonds issued by the 17 nations that use the common euro currency as one way to help solve the continent’s debt crisis, and stricter oversight of the spending plans for all the eurozone countries. But the eurobond idea is controversial and German Chancellor Angela Merkel said her government remains adamantly opposed.
Economically stable eurozone countries fear that if eurobonds are sold, they will end up paying for the debts of countries like Greece, Ireland and Portugal, all of which have needed to secure international bailouts in the last year and a half, as well as for the economically weak governments in Italy and Spain.
