July 1, 2011
The European Union will soon decide whether Greece has engaged in enough belt-tightening to qualify for its last $17 billion tranche of bailout funding, putting the nation's debt crisis at bay for a while longer.
The bailout is a highly contentious subject in Greece. As the Greek Parliament voted in favor of the funding on June 28, thousands of protesters descended on Athens and clashed with riot police. Tear gas choked the streets as protesters and police pounded each other with clubs and firebombs.
It's also a controversial issue among the Eurozone finance ministers, who will decide on the last part of the $156 bailout package for Greece. The decision could happen as soon as Saturday, according to news reports. This is the fifth tranche of a bailout that was approved by members of the European Union last year.
Assuming they OK it, as expected, Greece will be able to keep functioning for a while longer. But it won't take care of the nation's long-term budget problems, according to Mark Blyth, an economics professor at Brown University in Providence, R.I.
"This is simply giving them more breathing space while they're kicking the can down the road," said Blyth, referring to the bailout. "They need to have enough money to cover the primary fiscal debt, keeping the lights on at the hospitals and the military bases. Once they've got that, they're able to default without shutting down the country."
Blyth believes that a Greek default is inevitable. "Ultimately, there's no way the Greeks can pay back what they've borrowed," he said.
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