Photo: F Delventhal on Flickr
This is a BIG week for Greece and the euro.A number of crucial votes could decide the fate of the Greek bailout and whether or not we will see the proposed expansion of the European Financial Stability Facility come to fruition.
The EFSF expansion plan is at the heart of a number of proposals we’ve been hearing to save the eurozone from the mounting sovereign debt crisis. Approval of an expansion plan could be crucial to the future of the euro as a single currency.
Here’s are the events that could decide the fate of the eurozone this week.
The Greek parliament will vote on a property tax law that comprises the first of two steps to help the country meet its deficit-reduction goals. The vote will serve as a bellwhether for PM George Papandreou's Socialist government, which has been facing increasing popular discontent as austerity measures take their toll on the Greek economy.
According to the WSJ, a more important test for the government will be the next round of austerity measures -- pension cuts, public-sector layoffs, and tax increases.
Meanwhile, massive protests continue across the country.
Slovenia will vote on EFSF expansion tomorrow, even though its government collapsed a week ago. This could have delayed the vote indefinitely. Well, it appears that at least someone has their act together.
Also on Tuesday, Greek Prime Minister George Papandreou will encourage the German parliament to pass a July 21 proposal to expand the EFSF and bail out Greece, again.
Finland votes on the EFSF expansion on Wednesday. Finnish Prime Minister Jykri Katainen has said that parliamentary approval for the deal is a priority.
However, we've heard no reports that a final agreement to provide collateral in return for Finland's participation in the bailout had been reached. This is troublesome, as Katainen reaffirmed his country's demand for collateral today, according to the Helsinki Times.
It seems unlikely that passage of the EFSF expansion plan -- with or without the nearly $150 billion in aid promised as part of a second bailout -- would be contingent on a collateral deal, particularly since the agreement announced on July 21 included a collateral stipulation for Finland.
Finance ministers moved closer to resolving the collateral issue at the EcoFin meetings last week.
German MPs will vote on EFSF expansion on Thursday. If the proposal does not succeed in Germany, the eurozone can pretty much kiss existent plans for an orderly Greek default goodbye. Nonetheless, German officials have said they are confident the plan will pass.
French newspaper Le Monde reports that German Chancellor Angela Merkel and French President Nicolas Sarkozy could meet in Paris on Saturday. Markets will be hoping that such a meeting would produce a breakthrough in resolving the crisis, and perhaps spell the coming of a euroTARP-like solution.
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