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German aid for Greece comes with price

A demonstrator rises his fist in front of riot policemen blocking the entrance to the finance ministry in Athens.

TEXT OF STORY

Tess Vigeland: Today the Prime Minister of Greece, George Papandreou, said the country's very survival is at stake. Without billions of dollars in emergency loans, the government could go bust. Word from Berlin today is that the Germans are now prepared to help -- at a price.

Marketplace's Stephen Beard has that story from London.


Stephen Beard: Most Germans oppose bailing out Greece. That's why Chancellor Merkel has dragged her feet. Her government faces a crucial election on May the 9th. She could lose control of the upper house of parliament. Nevertheless Merkel is going to upset her voters. She'll have the rescue package approved by the end of next week.

Analyst Heinz Schulte says Merkl had no choice. There is now a real danger of the crisis spreading across the eurozone.

Heinz SCHULTE: I think the situation is so dramatic, particularly against the background now -- if you look at Portugal and Spain -- that something had to done. She couldn't wait. And I'm sure she's not comfortable with that position.

To limit the political damage at home, Merkel insisted on much tougher medicine for Greece -- like higher taxes and cuts in public sector pay by up to 20 percent. But the recent austerity measures provoked violent protests and strikes in Athens. There's serious doubt the Greek government will be able to administer even more pain.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.
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The problem was not created by Greece, but is an inherent problem of the Euro. It is a symptom of the different levels of ability of the national economies to compete in the Eurozone. By "deficinition" half of the countries are below the median competiveness in the Eurozone, and half are above. Given enough time, all of the countries in the aforementioned first half will get a debt burden that cannot be sustained by their growth. Much of the debt in the Eurozone economies was vreated by the effort to bailout its financial institutions. It is these same financial institutions that then attacked the Eurozone, biting the hand that fed them.

As another commented here, it's difficult to see this situation.

I wonder how people in Greece react if Germany help economically and Greece takes actions. Will they still protest and strike?

Seriously? It's difficult to see how the Greeks can expect another country to bail them out of their self-imposed situation when they protest efforts to reign in what amount to opulent state benefits and entitlements...

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