While German Chancellor Angela Merkel said she’s waiting for a report from international lenders, the news magazine Spiegel said a decision has already been made that Greece will get its next installment by the end of November.
Greece is awaiting a $38.8 billion loan, the last in a first series of $152 billion in rescue monies from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) as well as a second bailout of $172 billion. Those have been put on hold until the uneasy coalition government led by Prime Minister Antonis Samaras passes a $17.45 billion spending cut and tax hike plan and imposes more austerity measures.
Samaras has hoped to have it ready, along with the Troika’s stamp of approval, for a meeting Oct. 18 in Brussels of EU leaders, but dissension from his coalition partners has set it back.
Despite the delays, Spiegel said Greece will keep getting money, as there are fears that the country could otherwise default and jeopardize the 17-member Eurozone. But in an indication that EU leaders still don’t trust Greece, it reported that Merkel and French President Francois Hollande want the money put into a special escrow account in the Bank of Greece to make sure it first pays back banks and investors and doesn’t misspend the funds.
A Greek exit from the Eurozone could trigger a global economic crisis of dire proportions and must be avoided at all costs, a respected German think tank said in a study. While Merkel won’t relent on austerity demands, she said Greece has to be kept in the Eurozone at almost any cost.
“A Greek exit from the euro carries the risk of a European and even international conflagration and could trigger a global economic crisis,” Bertelsmann Foundation said, citing the study it commissioned from Prognos. Greece’s departure would entail costs for the country, already in its fifth year of recession, totaling 164 billion euros, ($214.7 billion) or 14,300 euros ($18,722) per capita, until 2020, said the study, which ran a cost analysis of various scenarios.
A ‘Grexit’ would create pressure for the other heavily indebted southern European countries – Portugal, Spain and even Italy – to leave the common currency, a development that it said would threaten “a dramatic international recession.” The reported added that the world’s 42 biggest economies would suffer losses of 17.2 trillion euros, or $22.52 trillion, in a worst-case scenario
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