Wall Street Journal
June 19, 2011
Prime Minister George Papandreou reshuffled the Greek cabinet Friday in a last-ditch effort to gain popular support at home for his government's fiscal austerity and privatization plans. The same day, the main creditor nations of Germany and France agreed to the rough terms of a much-needed €120 billion ($172 billion) fiscal bailout for the country. Yet the opposition parties in Athens may still reject the deal.
No Greek political party or public-sector union has any incentive to agree to the terms of any European Union and International Monetary Fund rescue package because they believe the terms can be improved as long as they keep protesting. The key assumption is that a Greek default would destabilize the eurozone economies and possibly the global economy, too—so foreign debtors will likely continue to fund the country's ballooning public debt.
Thus the opposition New Democracy Party's leader, Antonis Samaras, has adopted a bellicose position against the bailout. The crowds protesting daily in the center of Athens have followed suit, calling the EU and IMF plan an act by "evil foreigners" to "subjugate the proud Greek people." Both groups know their rejectionism carries no cost since they assume foreign creditors have no choice but to continue to fund the country. Some parties of the left, like the communist members of Syriza, articulate this blackmail openly.
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