Shipwreck has been avoided

Having succeeded in convincing between 85% and 95% of its creditors to write down part of its debt, the Greek government has finally accomplished one of the tasks expected of it. But now it will have to convince the people that the sacrifices it has demanded will not be vain.

Published on 9 March 2012 at 15:44
Greek Prime Minister Lucas Papademos has been given some breathing space.

Greece’s private-sector creditor debt swap has now been completed [with bondholders accepting new bonds worth 50% of their original investment], and deemed a major success. As the biggest write-down in history, it amounts to an effective response to all of those who considered that this objective was very difficult, or even impossible to attain.

Now we only have to complete one further step for the full application of the agreement reached on 26 October and to be assured of conditions that will give us a better chance of overcoming the crisis. It is an outcome that has many implications. First and foremost, it is confirmation that our country is beginning to regain lost credibility. And we should take advantage of this as we redouble our efforts in the next phase of a programme, and in so doing prove that we are determined not to bungle the last chance that we have been given.

Our chances of success will be increased if we succeed in assimilating all of the implications, both positive and negative, of our experience over the last two years. Avoiding the missed targets and delays that have been a feature of the manner in which we have fulfilled our obligations will be crucial, as will be the success of Lucas Papademos’ governance. With this in mind, the next government, regardless of its political colour [the date may be in April], should model its actions on those that have been implemented over the last three months.

This is perhaps the first time that our government has succeeded in fully completing a task that has been entrusted to it. And it was far from easy. Now future governments will have to prove that the sacrifices made by the Greek people over the last two years, and the sacrifices they will be asked to make in the future, were not and will not be in vain. At the same time, they will have to show that the confidence shown by our partners and creditors is fully justified.

Elections

Brussels prefers vote to be postponed

The deal with creditors is a further step towards overcoming the crisis, but Greece still presents a major political risk, arguesLa Tribune. The business daily notes that the EU would like the early general elections slated for next April to be postponed.

The three parties to the left of the social democratic party PASOK account for 39% of intentions to vote. […] With such a strong hard left, there is significant risk that the current road map will be called into question.

The EU would prefer a return to the initial election calendar stipulating a vote in 2015, which would allow more time for the restoration of stability in the country. La Tribune concludes with a warning –

… the risk of an uncontrolled social explosion is at least as significant as the risk of a disorderly default.

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