Greece’s “bailout” depends on it being able to deliver real budget cuts. And fast.
Greece has been told to produce detailed plans this week to meet its budget deficit reduction targets in 2011 and 2012, as well as this year, before it can qualify for a combined rescue package from the International Monetary Fund and fellow eurozone members.
As pressure increased in Athens to step up the pace of negotiations, Germany made it clear that a three-year programme must be agreed with the IMF, the European Central Bank and the European Commission, before the combined €45bn ($60bn) loans can be approved to meet the Greek government debt repayment schedule for the current year.
On paper Greece can probably do this. Whether its citizens will accept the sharp deflation-inducing budget cuts without taking to the streets is another question.
The question is: how long before the Greeks begin to wonder what the benefits of being part of the vaunted European community really are, especially given the obvious hostility from the continent’s economic and political balast, Germay.
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