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Inside Story
Will Greece default on its debts?
We ask if the deepening social, financial and political turmoil will send the Greek economy spiraling downward.
Last Modified: 08 Feb 2012 10:45

Greece is on the brink.

"The Troika are trying to ensure that the money goes straight to the creditors to prevent Greece from defaulting, but in doing so they are stripping Greece of her economic and political sovereignty. They hope to stabilise the situation and make sure that the bankers and hedge funds get paid, and that pensioners and the poor don't take priority over them."

- Ann Pettifor, the director of Prime

Workers are out on the streets, and on strike. The economy is in a downward spiral. There are fears that the country could default on its debts.

There was elation when a second bailout for Greece was announced by European leaders in October. That package - of some $170bn - is still on the table.

But the European Union (EU) made it clear they would only hand over the cash if Greece introduces a massive new austerity plan.

And it is the details of those large cutbacks that are still being argued over, four months later. It is crunch time once again now with a deadline for bond payment fast approaching.

Meanwhile, Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, have proposed setting up a separate account for Greek debt payments to reassure creditors.

"A default by Greece will be a disaster for both the Greek society and the eurozone because it will trigger a domino destabilisation effect."

- George Kapopoulos, a political analyst

Sarkozy warned the Greeks that they have no option but to accept the package, while Merkel said they must be prepared to do what it takes.

So, how likely is Greece to default, effectively sending the country into bankruptcy? And could that bring the entire eurozone down?

Inside Story, with presenter James Bays, discusses with guests: Ann Pettifor, the director of the economic thinktank Prime; Matina Stevis, a Greek-born journalist for Dow Jones and the Wall Street Journal; and George Kapopoulos, a political analyst and financial journalist.

"A decision has to be made unanimously by the Greek political class or at least by those three parties that support the government, and it has to be done fast … time is ticking. You're looking at a country that is undergoing an economic, social and political destabilisation … this could have almost unpredictable outcomes."

Matina Stevis, a Greek-born journalist


Source:
Al Jazeera
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