Eurozone finance ministers agreed a 130-billion-euro (US$172-billion) rescue for Greece on Tuesday to avert an imminent chaotic default after forcing Athens to commit to unpopular cuts and private bondholders to take bigger losses.
By imposing an embargo on Iranian oil exports and freezing assets of its central bank, EU members hope to cut so deeply into government revenues Tehran will agree to accept international safeguards on its nuclear program.
But the sanctions themselves may be the penultimate step before a possible military attack.
Western leaders like Nicolas Sarkozy, the French President, have insisted stiff economic sanctions are necessary to avert a possible war with Iran.
But if sanctions fail, war may inevitable.
(The Nimitz-class aircraft carriers USS John C. Stennis, left, and USS Abraham Lincoln. Photo: REUTERS/U.S. Navy/Mass Communication Specialist 3rd Class Kenneth Abbate)
Greek government on brink of collapse The Greek government teetered on the brink of collapse on Thursday over plans for a referendum on a euro zone bailout, with defections from the ruling party casting grave doubt on whether Prime Minister George Papandreou can survive a confidence vote.
“I don’t think the government will last until tonight,” said Costas Panagopoulos, Managing Director of pollsters ALCO.
Finance Minister Evangelos Venizelos broke ranks with Papandreou, coming out against holding the referendum after a bruising meeting with the German and French leaders, who made clear that Greece would not receive a cent more in aid until it votes to meet its commitments to the eurozone.
“The referendum is dead,” Greek ruling party lawmaker Nikos Salayannis said on state radio.
Greece needs ‘firewall,’ Flaherty says The realization that Greece’s failed finances may be beyond repair is prompting calls for a drastic course of action: Quarantine. Among those advocating for the establishment of a “firewall” around Greece is federal Finance Minister Jim Flaherty.
“The danger is that the Greek situation unravels and that that would have a contagion effect on European banks,” Mr. Flaherty told reporters on Wednesday, adding, “we want to make sure the situation’s contained.”
Greeks rage against austerity while EU argues Striking Greeks raged against a new wave of austerity on Wednesday after eurozone finance ministers failed to agree how to make private creditors contribute to a second bailout for their indebted country.
As workers staged a national strike, thousands of protesters — some chanting “Thieves, traitors! Where did the money go” — massed at parliament to try to prevent lawmakers enacting more tax hikes, spending cuts and sell-offs of state property.
Photo: Protestors fight with riot police during massive clashes at the central Athens Syntagma square on June 15, 2011. (LOUISA GOULIAMAKI/AFP/Getty Images)