Smoke and Mirrors: Greece's Day of Reckoning

by Roya Wolverson

Time
July 4, 2011

Scraping together $40 billion in spending cuts in a country already shaved to the bone is a tall order. But try doing it with the lights off while dodging rocks, gas bombs and tear gas and with impatient foreign officials breathing down your neck.

Welcome to the Greek debt crisis 2.0. On June 21, Greek Prime Minister George Papandreou narrowly skirted political death in a vote of confidence in the Greek Parliament, after weeks of political infighting and escalating protests against a new round of austerity measures demanded by the European Union and the International Monetary Fund. Won by a paper-thin margin of 10 votes (and two abstentions), the victory came just as parts of Athens were being hit by rolling blackouts caused by worker strikes at Greece's main power utility and as thousands of protesters were swarming Parliament and shining hundreds of green lasers into the eyes of riot police in Syntagma Square. Days earlier, rioters had hurled gasoline bombs at the country's Finance Ministry. All in time for Europe's finance ministers to breeze in for a surprise visit to Athens to see how things were going.

Just hours before the vote, newly appointed Greek Finance Minister Evangelos Venizelos called on Parliament to "convince our partners that we are serious and credible as a government, as a Parliament and as a country." That will take some more doing. Greece still needs to pass more budget cuts, scheduled for a vote next week, to secure a much needed $24 billion tranche of aid from the E.U. and IMF's last bailout to cover its expenses through summer. Greece's opposition leader Antonis Samaras has been putting up a fuss, making those cuts even more difficult to pass. If they do, there's no telling how long the Greek people will tolerate them or how many more bailouts will be needed to stave off another default down the road. Whether Greece's troubles end in a bang or a whimper, the impact is likely to extend far beyond the country and its dour creditors. There are vast implications for the direction of Europe, the future of the euro and the strength of global economic recovery.

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