Muddling through
October 8, 2011
Representatives of the international "troika" responsible for administering Greece's bailout package have expressed growing concern that the attempts to stabilize the Greek economy and prevent a spread of the eurozone debt crises could fail.
The troika - which includes the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) - has warned Athens that the next 8-billion-euro ($10.7 billion) tranche of badly needed aid money is contingent upon major reforms to the Greek economy.
"Greece clearly stands at a crossroads," said Poul Thomsen, the IMF representative to the troika. "It is clear the (rescue) program will not succeed if the authorities do not take the path that entails far stricter structural reforms than the ones we have seen so far."
Although Greece has raised taxes and made deep cuts in spending, the troika has criticized the national government in Athens for implementing the measures ineffectively.
"Their implementation takes time and often the necessary structures are missing," said Matthias Mors, troika representative of the European Commission.
Lack of leadership
The troika's growing skepticism about Greece's willingness to reform comes as the head of the World Bank singled out Germany for not displaying European leadership during the debt crisis.
"When the East bloc collapsed some 20 years ago, Chancellor Helmut Kohl had a vision of how things could develop," World Bank chief Robert Zoellick said in an interview with the Germany economic magazine Wirtschaftswoche.
"There is a total lack of this now, and the longer that continues, the more money it will cost and the fewer options will remain," he added.
Zoellick called on the continent's leaders to provide Europe with political direction as they continue to engage in dialogue.
"The key question is whether people and governments in European want to establish a political and financial union to complement the currency union," he said.
Brave new Europe?
Although German Chancellor Angela Merkel managed to gain the overwhelming support of parliament last month to expand Europe's temporary bailout fund, she faces growing internal divisions within her coalition over European policy.
Elements within economically liberal Free Democrats (FDP) and the conservative Christian Social Union (CSU) have expressed opposition to further bailouts and called for tougher punitive measures for eurozone nations that violate fiscal discipline.
Merkel is set to meet with French President Nicolas Sarkozy on Sunday to make preparations for the upcoming EU summit and eurozone meeting on October 17 and 18. On Saturday, Sarkozy met with IMF chief Christine Lagarde in Paris.
Author: Spencer Kimball (dpa, Reuters)
Editor: Andreas Illmer