With Greeks Now Ready to Make a Deal, What Can We Expect?
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Version 0 of 1. Q. Now that the Greek Parliament has approved a package of pension cuts, tax increases and other changes along the lines of what the country’s creditors have been demanding as a condition for more bailout money, what happens next? A. Finance ministers from the countries that use the euro are meeting in Brussels on Saturday to decide whether Greece has come far enough in meeting their demands to justify opening negotiations over another bailout, the third since 2010. Q. What are the prospects for a deal? A. Certainly better than they appeared a few days ago. France is pushing hard for a compromise. The United States has been encouraging everyone to work things out. But in many European countries, not least Germany, there is deep suspicion about whether the Greeks are really willing to follow through on their end of the bargain, especially after a national referendum last Sunday in which Greeks overwhelmingly rejected pretty much the same terms the government says it is now willing to accept. Q. What happens if there is no agreement this weekend? A. Greece’s banks are all but broke, able to allow only small withdrawals each day. Without a deal, they could go belly up in the next day or two. The government is also struggling to pay its bills, never mind some big debt payments that are looming. The economy is seizing up. Without an agreement this weekend to resume talks — or at least make substantial progress in that direction — Greece might well have to drop out of the euro system and start printing its own currency. If that happens, it will be the first time a country has exited the euro, a currency union in which membership was intended to be irrevocable. Q. If there is a deal, will this whole complicated situation really be over? A. No, not at all. Any agreement this weekend — the finance ministers’ meeting on Saturday is to be followed on Sunday by meetings of the leaders of all the eurozone countries and then the entire European Union — would only be to start formal negotiations on a new bailout. Lenders would have to come with some arrangement to keep the Greek banks solvent and allow the Greek government to meet its financial obligations while a bigger bailout is hammered out. Q. How much does Greece need? A. The amount has been changing as the country’s situation has deteriorated. Greece had asked for 53.5 billion euros, or about $59 billion, from Europe’s bailout fund over the next three years. But Greece’s main creditors — the other nations that use the euro, the European Central Bank and the International Monetary Fund — estimated on Saturday that the actual amount necessary over that period is on the order of €74 billion. Q. Who’s to blame for this mess? A. Much of Europe feels burned by the Greeks, saying that Greece has already been bailed out twice but failed to take the harsh medicine necessary to get its economy back on track so that it can repay what it owes and allow its citizens a shot at greater prosperity. Much of Greece feels burned by its creditors, especially Germany, which Greece blames for imposing budget-cutting austerity measures that undercut economic growth and impose more misery on the Greek people without any payoff. Finding common ground against that backdrop remains difficult, to say the least. |