Greece is set for a momentous week that will include the expected approval of its sixth loan tranche by the International Monetary Fund, the latest inspection by troika officials and the voting of the 2012 budget, but all this will fade into insignificance as European Union leaders gather on Thursday and Friday to thrash out a deal that could keep the euro alive and the EU together.
The executive board of the IMF is due to meet in Washington on Monday to decide whether to approve the fund?s part of the 8-billion-euro loan installment. Greece is set to receive the money between December 10 and 15. This will pave the way for representatives of the IMF, the European Central Bank and the European Commission to return to Athens to check on how the government is progressing with its efforts to meet the reform and fiscal targets it has been set.
They will also begin talks with government officials about a new bailout package for Greece. However, in order for Athens to qualify for the planned 130-billion-euro scheme, it will have to outline how it will save another 7 billion euros between 2013 and 2015 through spending cuts or a rise in revenues.
Before then, the 2012 national budget, which includes an extra 5.3 billion euros in taxes, is due to be voted through Parliament. The ballot will take place tomorrow and most of the MPs of the three parties in the interim government are expected to approve it.
Nevertheless, Prime Minister Lucas Papademos will head to the EU summit toward the end of the week knowing that for all the steps taken by the Greek government, the country?s survival and indeed that of the euro as a whole will depend on what is agreed in Brussels.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are due to meet in Paris today to discuss plans to save the single currency. This will likely involve a closer fiscal union and a more active role for the European Central Bank. Germany wants eurozone members to agree to greater budget discipline in return.
Speaking at a conference of the Social Democrat (SPD) party in Germany on Sunday, former Chancellor Helmut Schmidt suggested that Berlin should not impose its wishes on its partners. ?We need to show heart toward our friends and neighbors, and that is especially the case for Greece,? he said.