Greece granted four-month extension

Nearly a month after the election of Greece’s new prime minister, Alexander Tsipras, the eurozone has finally agreed on a four-month extension of the Greek bailout. Although this green light is without doubt good news, a longer fight is in store for Greece.

The new four-month extension plan ensures that Athens will not run out of funds. The decision was made over a conference call during which the eurozone reviewed the Greek economic reforms. These proposals were very much a compromise between Greece’s creditors, the Syriza party, and the Greek electorate, leaving all sides slightly unsatisfied.

In regards to the International Monetary Fund (IMF), Greece was cautioned that its proposals do not meet its very own expectations. The European Central Bank warned Greece they could only replace existing austerity measures with a new plan that is just as effective.

In Berlin, patience for Greece is slowly dwindling.

The Germans expect the Greeks to be grateful for the compromises they have created. Instead, they appear disrespectful, according to the Guardian. As soon as a 17-week loan was declared for Greece, its finance minister, Yanis Varoufakis, decided to increase demands and required the massive debt be partly written off.

Even though the German Bundestag approved the extension, Greece will have trouble getting funded until it meets the requirements of its creditors. Some members of parliament have doubts, yet the extension passed easily. According to BBC, much of the motive behind granting the extension is in attempt to keep Europe united.

German Finance Minister Wolfgang Schäuble sees the extension as providing extra time to a country in need to successfully end the bailout. Without the extra time, the eurozone breakup could have caused more problems financially and possibly destabilized the euro.

Professor of Political Science Frank Alcock believes Germany should try to help Greece as much as possible.

“I think that it is wise for Germany to do everything it possibly can to salvage Greece’s ability to overcome its financial and fiscal crisis and stay within the eurozone,” Alcock said.  “It might not be possible, and Tsipras may fail even with the latest bailout package. However, the extension does three things: It provides some possibility greater than zero that Greece will turn things around. Without the extension, Greece crumbles; it provides a measure of reassurance to market players that the major economies will do everything in their power to avert collapses; it buys a little more time to prepare for a Greek exit.”

 

Despite its extension, Greece must carry out its reform program by April before they can receive the final amount of 7.2 billion euros. In the meantime, Greece must also start repaying its increasing debt, including two billion euros to the IMF by March and 6.7 billion euros to the European Central Bank by July and August.

“I don’t have a lot of confidence in Tsipras’ promises but a little hope is better than none,” Alcock said. “I think it’s more likely than not that he will fail to save the Greek economy. But sometimes I’m wrong and the world turns out better. So I hope I’m wrong.”


Information for this article taken from theguardian.com, bbc.com

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