Newswise — The world is watching Greece, and for good reason, says Nikolas Zahariadis, an expert on international affairs. A Friday vote of confidence among the parliament for a bailout from the country's sinking debt could either cause them to sink or swim.
Greece’s Prime Minister George Papandreou is desperate to convince parliament to push it through so that the people can cast their vote in mid-January, Zahariadis says. A ‘no’ could set in motion a ripple effect of financial devastation across Europe, with waves reaching into the United States.
In order for Greece to get bailout loans they must adhere to required austerity measures by international creditors from the Eurozone and the International Monetary Fund. The people of Greece are revolting. A recent opinion poll revealed that 72 percent of Greeks want to remain in the Eurozone, but 60 percent of them don’t agree with more austerity measures.
The people are flip-flopping, Zahariadis says. Papandreou is trying to force people to take a stand. On top of that, there is in-fighting within Papandreou’s political party.
The prime minister’s problem is that he is not successfully convincing his people that austerity has an end, Zahariadis said. The Greeks went through a period of austerity, but the call is for more. Papandreou needs to force the issue and say, “There is a need for austerity or else,” Zahariadis says.
German Chancellor Angela Merkel and French President Nicolas Sarkozy will hold emergency talks on the Greek issue with the EU, the IMF and Eurozone leaders on Wednesday. A meeting with the Greek government is also planned before the Thursday summit of leaders from the G-20 economic powers in Cannes, France.
If Greece goes bankrupt, it could cause bank failures in Europe and new recessions, Zahariadis said. And, since Europe is the U.S.’s main trading partner, it affects us as well. Yesterday, Greece’s uncertainty caused Dow stocks to go down 300 points.
“If the parliament does not give him a vote of confidence, the government falls,” Zahariadis said. “If the government falls, it will show how a small country with a small economy can cause serious harm to an economic union.”
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