Greece Reality Check: Euro Crisis Worsens as EU Leaders Play for Time

Spiegel
May 16, 2011

Europe's leaders are still opposing a Greek debt restructuring, and they are exacerbating the euro crisis as a result. The Greek economy is at risk of collapse and resistance to further loans for the troubled nation is mounting. The continent urgently needs a new bailout plan.

The formal act was quickly settled, but German Finance Minister had no time to celebrate. The members of the budget committee in the German parliament, the Bundestag, had hardly given their blessing to billions in new aid for ailing Portugal last Wednesday before parliamentarians were drilling the finance minister with questions about the next troublespot -- Greece.

The lawmakers wanted to know more about the secret meeting held the previous Friday, which had been reported by Spiegel Online and which top European politicians were still denying as their limousines were pulling up to the Château de Senningen in Luxembourg. Was it true that Greece needs billions more in financial assistance?

More importantly, the parliamentarians wanted Schäuble to elaborate on reports that Greece is insolvent and that the government in Athens has already considered withdrawing from the monetary union.

In his lengthy response to their questions, the minister denied the reports, explained the turf battles during the negotiations in Brussels and asked the parliamentarians to remain patient until an international panel of experts had thoroughly assessed the situation in the country. "For now, we're going to wait until the results of the report are out in July. Then we'll see what happens next."

As they play down the issue, try to appease critics and play for time, Germany's finance minister and his European counterparts are determined to keep on denying reality in the struggle to rescue the common currency.

More than a year ago, they created a €110 billion ($157 billion) bailout fund for Greece. Since then, however, the likelihood of a government bankruptcy has only increased. The country's mountain of debts is growing, the economy is at risk of collapsing and the promised austerity programs are not progressing as planned.

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