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No Bailout for Greece–Yet

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Greece’s hard-won agreement from political leaders in Athens was rejected late Thursday as not tough enough. Instead, Greece was told to go back to the drawing board, find more cuts, and give firmer assurances that the promised measures would actually be carried out.

Reuters reported that, after six hours of discussions, the decision was made to withhold the 130 billion euro ($173 billion) bailout unless Greece further cut its budget, passed legislation to implement the measures and ensured that all major party leaders committed support to the program in writing to forestall abandonment of the measures prior to elections.

In a Bloomberg report, Jean-Claude Juncker, chairman of the Eurogroup of finance ministers, was quoted saying, “We can’t live with this system while promises are repeated and repeated and repeated and implementation measures are sometimes too weak.” He added, “In short, no disbursement before implementation.”

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Despite the urgency of the situation–Greece needs to receive bailout funding prior to a bond payment on March 20–the country’s two largest unions called strikes again Friday to protest the measures. In a statement, civil servants’ union ADEDY said, “The measures included in the new [European Union/International Monetary Fund] memorandum and which the three political leaders agreed with the government and the troika are the ‘tombstone’ of the Greek society. It’s time for the people to speak up.”

Coming down on the opposite side of the issue, Fitch Ratings repeated its evaluation that Greece will default even with the rescue package. Tony Stringer, Fitch’s managing director of global sovereigns, was quoted saying that Greece “must get this deal agreed [to] really within the next few days to enable them sufficient time and have the new bailout money disbursed before that bond is due. If they don’t manage to achieve that, then it could be in the realm of a disorderly default.”