May 16, 2012
Greece named a caretaker government to take it to next month's election, which is shaping up as a game of chicken over the country's membership in the euro.
Greece's battered establishment parties and the country's European creditors claim the election, expected June 17, is voters' chance to show they want to stay in the euro—by affirming the need for strict fiscal retrenchment and economic liberalization.
The country's ascendant austerity opponents, led by the Coalition of the Radical Left, known as Syriza, say Europe is bluffing and wouldn't dare to force Greece out of the euro, even if it renounced the terms of its €173 billion ($220 billion) bailout program.
The high-stakes confrontation could determine within weeks whether Greece is cut off from international rescue loans and forced to print its own currency, or whether Europe blinks and lets Greece run bigger fiscal deficits longer, to prevent the spillover of financial panic to other indebted euro-zone nations, such as Portugal and Spain.
Greece's austerity program is effectively on hold until its political future is clear.
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