Despite yesterday's approval of tough austerity measures by Greece's cabinet, the country still seems perilously close to bankruptcy and exit from the Eurozone. The government agreed to a tough round of austerity cuts that seems at first glance to meet the terms of the European Central Bank and the International Monetary Fund for a second bailout package in two years.
While on the surface there appears to be agreement in Athens for the cuts needed to secure €130 billion (Dh632 billion) in additional funding, the reality is that the cuts have to be sold to a weary and angry Greek electorate. The deal was only reached after a marathon session of political brinkmanship. Greece's Labour Minister, Yannis Koutsoukos, resigned in protest at the deal which will see the private-sector minimum wage cut by 22 per cent. At least 10 per cent of the government's 150,000 public sector jobs will be eliminated.
Greek unions have taken to the streets to oppose the measures, and it remains to be seen if parliament has the stomach to stave off deep opposition to the austerity measures. Already, the Greek economy is about to enter its fifth recession in the past decade. With elections due in the spring, the chances are the deal will be watered down. But there is no more room for dithering or putting off the inevitable if Greece wants to remain in the Eurozone. Germany's Finance Minister, Wolfgang Schaeuble, has already questioned if the tough austerity package is enough. World markets have largely figured in the effect of Greece's eventual demise and euro exit. With EU leaders committed to greater fiscal conservatism under the terms of a new draft treaty, there seems to be little alternative for Athens. The Greek tragedy only ends with the return of the drachma.
