Entries in Debt Crisis (2)


Greek President Quits Attempts to Form Coalition Government

iStockphoto/Thinkstock(ATHENS, Greece) -- Ten days after the general election held on May 6, Greek President Karolos Papoulias has decided to quit trying to cobble together a coalition government as no combination of parties with the required minimum of 151 MPs in the 300-seat Greek Parliament could be found.  The president has announced that another general election should take place Sunday, June 10 or June 17.

This is bad news for the European Union and United States, since Greece will be without political leadership for a month, and private markets have long lost patience with the unending crisis. 

Greece, a NATO member and long-time U.S. ally, could even be pushed out of the European Union and its financial Eurozone.  That could trigger a crash in the markets in Spain, where the economy is five times bigger than Greece’s. 

The economic recovery of all of Europe is jeopardized, and, as President Obama has repeated on numerous occasions, the U.S. economy needs a strong Europe -- the number one buyer of American exports.

At 2 p.m. Tuesday, Papoulias had organized a meeting in the presidential palace in Athens, with leaders of almost all the major Greek political parties.  Only the leaders of the Communist and Neo-Fascist parties were left out.  Two hours later, the politicians came out without a word for journalists.

Fifteen minutes later came a communique from the presidency, announcing the calling of new elections.  From this point, the constitution explicitly sets the course.  The senior judge in the highest rank temporarily assumes the office of prime minister.

The meeting called for May 16 at the presidency is intended solely for the appointment of three ministers to handle the transitional electoral process.

The bone of contention remains the famous “memorandum” of fiscal and structural reforms that the International Monetary Fund, European Central Bank and European Union have imposed on Greece in exchange for some 240 billion euros worth of subsidized loans, to be released in installments, depending on progress made.

The socialist PASOK and conservative ND parties, who had accepted the terms of this memorandum at the beginning of the year, reiterated that the country should stick to them; all other parties campaigned to reject it, and they still refuse the terms. 

The problem is that the last election dealt huge losses to both PASOK and ND, leaving them with only 149 seats in total.  The two parties alternately ruled Greece since the fall of a military regime in 1974.

Saying that Greece must honor its signature to avoid exclusion from the euro area, PASOK and ND have already begun negotiations to form a front that can win the required majority in Parliament.  The various small liberal parties, who accept global capitalism and who believe that no country can live beyond the wealth it produces are being targeted.

Copyright 2012 ABC News Radio


European Debt Crisis: Leaders Meeting Again to Resolve Turmoil

Hemera/Thinkstock(BRUSSELS) -- European leaders are meeting in Brussels again on Friday to negotiate a way out of their debt crisis and restore the credibility of the euro currency -- or so they hope.  If they fail, economists say the shockwaves could derail the U.S. recovery.

This is the fourth recent European get-together that’s billed as a make-or-break “summit to end all summits,” and the “last chance to save the euro.”  Yet, there’s no doubt that the stakes are high.

German Chancellor Angela Merkel and French President Nicolas Sarkozy have spent the last week talking up the importance of the summit.  Sarkozy, who faces an election next year, has said the very existence of the European Union is under threat.

European leaders are expected to discuss ways of limiting structural deficits and increasing the firepower of the eurozone bailout fund.  The European Union is based on several founding treaties, as well as subsequent amendment treaties, that have been agreed to by all member countries.  Germany and France now say they want changes to those treaties to guarantee budgetary discipline.

The problem is that treaties can take years to negotiate and ratify, and the markets have shown that they’re in no mood to wait.  All 27 E.U. member countries have their own domestic concerns that can make compromises difficult.  The E.U.’s Treaty of Lisbon, for instance, took eight years to negotiate.

As European officials already acknowledge, new rules that come into effect several years down the line aren’t going to do the trick.  So there’s talk of a fast-track “fiscal compact” that won’t require treaty changes.  To further complicate things, discussions are underway to see if reforms can be agreed to by the 17 members that use the euro and without the approval of those E.U. members that retain their national currency.

It remains to be seen if Europe’s leaders can agree on a deal that will help those countries with massive debts, and persuade the markets that they can weather the storm.  The rest of the world, including the White House, will be watching closely, and the outcome of this latest summit will shape European politics for many years to come.

Copyright 2011 ABC News Radio

ABC News Radio