Lenders question the viability of the Greek debt

Greece’s foreign partners accuse the government of not proceeding with reforms and Athens replies that their tactics have plunged the country into recession and uncertainty. And they both fail to realize that everybody is right.

George Papandreou’s governments are in fact burdened with delays. But so is the Troika for estimating a 3.5% recession in June, while 2011 ended with 7%, also because of its own formula; but most importantly, due to its own delay in providing a permanent solution, thus prolonging the uncertainty.

Which brings us to today. The latest estimates put the Greek debt at 128% of the GDP in 2020. Does this mean it will not be sustainable? No, not with the support package that has been pre-approved at the October 26 summit. Germany refuses to put up more money. But they know that if they do not give what they said, then they risk losing everything. Everyone will lose everything, because without the PSI and a new loan, Greece will simply default.

This is why they are thinking of giving the loan, but in a closed account, which will pay off the loans. Greece will have to fend for itself regarding the rest. Which means further cuts in government spending and the welfare state.

And this is where the political issues enter the picture. During yesterday's teleconference, several ministers asked Evangelos Venizelos why the country is going to elections when the normal date is in 2013. The finance minister answered, knowing that this is yet another excuse by those who persist in delaying. This tactic of our partners has angered Athens. "Some want Greece back to the drachma," Venizelos said yesterday, hinting at Berlin, followed immediately by the harsh criticism of the President of the Republic.