Greek Bailout Depends on Monster To-Do List

PHOTO: Evangelos Venizelos, Greeces finance minister, center, speaks while George Zanias, chairman of Greeces council of economic advisors, left, and Pantelis Economou, Greeces deputy finance minister, listen during a news conference, Athens, Greece, F
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It took God, says the Bible, six days to make the world. If Greece re-makes itself in nine, the accomplishment will be only slightly less miraculous: Nine days is all the time that Greece's creditors have given it to enact reforms, which, say nationalists, amount to nothing less than a forfeiture of sovereignty.

Yet if Greece does not comply, it will fail to qualify for its next infusion of bailout money ($172 billion) and will almost certainly default on its loans.

Here's a small sampling of what Greece has on its to-do list between now and March 1:

Rewrite its constitution to give priority to debt service.

Establish an escrow account that can be tapped only by holders of Greek debt.

Accept financial oversight from foreign "inspectors."

Fire a legion of under-performing tax collectors.

Enact legislation liberalizing the country's closed professions.

Tighten rules against bribery.

Prepare at least two large state-controlled companies for sale.

Add to this that some lenders reportedly feel it may be necessary to postpone Greece's national elections, now set for April, if the nation slips any further into violence and social chaos.

"That's a lot," says Mark Weisbrot of what Greece has on its plate. Weisbrot, co-director of the Center for Economic and Policy Research in Washington, D.C., today is releasing a report titled "What Are They Doing to Greece?" that says a Greek default and Greece's exit from the EU are outcomes that should be taken seriously. "The European authorities are really pushing Greece to the limit, not just in an economic sense but politically," he says. "It will invite a nationalist backlash. It could help push Greece out of the Euro Zone as well."

While Weisbrot thinks Greece will somehow find a way to mollify its creditors by the March 1st deadline, his confidence has less to do with Greece's ability to accomplish reforms than with other EU nations' willingness to overlook its failure. "They have more to lose than Greece does," he says. "Nobody knows what the consequences would be for Europe of a Greek default. You hear all this bluster from the Netherlands and from Germany, but that's just bluff. I'm not saying there wouldn't be a melt-down. I'm saying there's enough uncertainty that the rest of Europe doesn't want to find out what would happen."

"I think they'll get it," Weisbrot says of the next bailout.

On paper, Greece already has submitted to a long list of concessions that includes giving lenders the right to seize the gold reserves of the Bank of Greece, agreeing for Greek bonds to be subject to English law, and cutting Greece's minimum-wage by 22%.

"On paper" may be the operative phrase here, say experts. Like Weisbrot, Gary Jenkins thinks Greece will get its bailout, but not because the country will actually accomplish its to-do list by March 1-- if ever. "They'll commit to do these things," says Jenkins, managing director of Swordfish Research. "But I don't think anyone in the EU actually expects them to fire all those tax collectors in the next week."

Greece's parliament will pass reform laws "to appease the rest of Europe," says Raoul Ruparel, head of economic research for the think-tank Open Europe. But the reforms themselves "will never happen on the ground." Greece will get its bailout, he predicts. But that bailout will be "just a stop-gap. Months later or a year later, we'll be right back in the same position."

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