Washington Post
February 6, 2012
European leaders pressed Greece on Monday to quickly resolve deadlocked talks over a new international bailout and are threatening to let the country default if Athens does not agree to new economic reforms.
In recent weeks, negotiators have been struggling to produce an agreement between Greece and private investors over how to reduce the country’s debts. At the same time, other European nations and the International Monetary Fund have been trying to negotiate $170 billion in additional international loans.
But progress stalled in recent days over what amounts to a European and IMF ultimatum to the country: Either move forward with a politically painful restructuring that Greek officials have long promised but failed to deliver, or international lending will stop and the country will be forced to default on its bond payments as early as next month.
A default by Greece could disrupt European and world financial markets and raise fears that other highly indebted nations in the euro zone would follow suit and that Greece would drop the common currency. But after two years of failed efforts to fix Greece, European and IMF officials see few options for dealing with a Greek political establishment that has slashed government spending to try to control its runaway debt but has not made more fundamental changes considered necessary to revive the economy.
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