The crisis in Greece concerning the nation’s crushing national debt has leaders warning that a continue stalemate in negotiations threatens not only the future of the country but that of the EU as well.
The Bank of Greece warned this week that a lack of agreement among EU financial leaders would result ultimately in a debt default by the nation that could quickly “snowball into an uncontrollable crisis” and explode inflation throughout the entire EU.
That eventuality would force Greece to leave the Euro causing an immediate depression in the country. And such an exit would come with serious financial implications to EU member nations that have invested billions in the Greek bailout package which runs out in two weeks.
The sticking point in negotiations over the last month is that EU heads have insisted that further economic assistance to Greece must come with promises from the Greek parliament that it will cut pensions and other entitlement commitments.
The problem, Greeks point out, is that pensions cannot be cut any further without the risk of severe civil unrest which was already on display in recent years as Greek civil workers and retirees rioted violently over mere austerity proposals.
EU finance leaders will meet Thursday to discuss proposals for compromise that may serve to pull Greece back from the brink. If those talks do not produce workable solutions, a Greek default may become inevitable and will send ripple effects throughout global markets.