For the past weeks, every time you open a newspaper or read an online news service, the names of two countries show up – Greece and Germany. They are in the middle of a hot debate over the financial situation in the South-East European country, where the leading economy on the continent is expected to help. Yet, all that is coming through are mixed messages.
A recent article in the Wall Street Journal phrased the problem in this way: “what’s being done to keep Greece from going broke.” Well, the fact is that no one is sure yet. After a range of multilateral talks and negotiations, where the Greeks called on their European partners to help the country from going bankrupt, the Germans agreed to help but are trying to find a way for doing so without burdening their tax-payers too much. Whether this will be done through loans, aid packages or some other new mechanism, no one knows.
In the most recent news, Germany suggested that the Greeks should go to the IMF. That is not really in the interest of the Euro-zone as a whole, since if the system does not manage to support itself, bringing in an outside support mechanism would look very bad in everyone’s eyes. To many pessimists, the Greek crisis is another drop in an almost-full cup and it is only a question of time for it to overflow.
Even Commission President Barroso came on the news recently, stating that the situation cannot be prolonged much further. In everyone’s eyes, and especially to economists, uncertainty is the worst state of affairs to linger in. It is therefore evident that action needs to be taken, and soon.
So, Europe needs to make up its mind sooner rather than later. Greece needs to raise several million Euros in the next two months. How it will do that is a mystery right now, but should become clearer after the European Council meeting on Thursday (25 March). Until then, all we can do is wait and count how many more times the Germans switch their position.