posted on: Thursday March 18, 2010
Tommy Cody ’13 / World Staff
According to the BBC, the European Union is nearing a multi-billion Euro bailout plan for Greece’s swelling deficit. Greece has been plagued by violent strikes and protests over the past few weeks because of the government’s serious and stringent response to the problem. Help from the E.U. is contingent upon Greece accepting assistance from the E.U. in financing its massive deficit. Despite the growing violence Greece still has not asked the E.U. for help. According to the BBC, Greece is grappling with a €300 billion ($419 billion) debt, more than four times higher than Eurozone rules allow. Greece needs to raise about €20 billion on bond markets to refinance debt maturing in April and May. The crisis poses as a threat to the value of the Euro. According to Gavin Hewitt of the BBC, officials are hoping that the bailout will be a last resort and will not have to be implemented. Germany and France would be the two main pillars of the deal, funding the vast majority, if not all of, the funds. Germany has voiced a strong opposition to helping Greece. Some believe that the German Supreme Court may challenge the E.U.’s decision if it follows through with the proposed bailout.According to the BBC, European Commission Spokesman, Jonathan Todd stated, “the commission stands ready to act if necessary. Technical work is ongoing and has not yet been concluded. All the rest is speculation.”The Commissioner for Economic and Monetary affairs Olli Rehn stated that the commission was working to implement tougher rules in order to monitor the lack of fiscal responsibility demonstrated by Greece and other European countries.In a statement to The Guardian, Rehn announced, “The Greek case is a potential turning point for eurozone,” adding that a failure to fix the problem would “do serious and maybe even permanent damage to the credibility of the European Union.”In order to bail out Greece, the E.U. has to to get around the current laws of the E.U. that prohibit a bailout for a country on the brink of insolvency.The rules state that no nation that uses the Euro should have a deficit any higher than three percent. Although Greece is currently at 12.7 percent, the Greek government has implemented a plan to cut the deficit down to three percent by 2010.