Financial Times
Editorial
November 6, 2011
For the second time in a week, Greece has pulled back from the brink. Having toyed with, and dropped, a referendum on the latest European rescue package, the country’s politicians have now pulled back from early elections. George Papandreou has agreed to stand down as prime minister, paving the way for a national unity government. Its make-up is to be decided today.
It is now crucial that Greek politicians bury their differences – if only for a few months – and back the latest rescue package from the European Union. It should be remembered that while the deal agreed a couple of weeks ago will involve more austerity in Greece, it also entails massive loans to the country and a 50 per cent write-down of Greek debt held by private bondholders – and therefore some badly needed partial relief from the crushing burden of debt.
If the new government fails to approve this deal, the promised billions from Europe will not arrive in December. At that point the Greek state could well be unable to pay salaries and pensions and Greece would be on the brink of a disorderly default.
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