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Heretofore, debt-defaulting Greece has operated on Raiders of the Lost Ark-logic: “You throw me the idol; I’ll throw you the whip.” Its European Union and International Monetary Fund sugar daddies have tired of sending cash without budget reforms in return. On Thursday, they rejected Greece’s newest amorphous pledge of budget cuts later for billions now. Burned before by big promises with no fulfillment, the Eurogroup sent a clear message to the Greeks through its chair Jean-Claude Juncker: “no disbursement before implementation.”
But with Greece already forcing creditors to take a haircut, and refusing to make good on its pledged reforms, why would European nations agree to throw more good money after bad?
A coalition of Greek political leaders came to an agreement on Thursday to narrow the chasm between revenues and receipts in hopes of paving the way for $172 billion in new loans from the European Union. But EU finance ministers balked at the proposal that contained very little in specified cuts for non-defense-related government expenditures. The European finance ministers demanded from the troubled nation $325 billion in new cuts and parliament’s preapproval of the plan before it will agree to a further bailout. Greece, which is already de facto in default since other nations are paying its creditors, stands to legally default on March 20 if it doesn’t receive a cash infusion.
The refusal to implement promised budgetary and economic structural reforms is a tacit admission that Greek politicians believe the debt crisis just isn’t their fault. This is a popular sentiment within Greece, muted only when going abroad with hat in hand. Foreign bankers, EU bureaucrats, and American capitalists are favorite scapegoats according to internal Greek rhetoric. If outsiders are to blame for the crisis, why should Greeks reform their economic system? It’s everyone else who has the problem, after all, not Greece.
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