Saving Greece

Europe Holds Euro Together – For Now

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The euro zone is trying its best to hold onto Greece, but deep skepticism remains.
  • Why it matters

    Why it matters

    Many in Germany remain openly skeptical about whether Greece is likely to remain in the euro zone, despite German lawmakers approving a third bailout program on Friday.

  • Facts

    Facts

    • Greece was handed a series of emergency financial lifelines on Thursday to keep the country and its banks afloat and out of bankruptcy for the coming weeks.
    • The German Bundestag on Friday gave German Finance Minister Wolfgang Schäuble a mandate to negotiate a third bailout for Greece.
    • Mr. Schäuble advocated in favor of the bill’s passage, although he has continued to hold out the option of Greece leaving the euro.
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  • Audio

    Audio

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On the face of it, Greece and Europe have stepped back from the brink. Fears that Greece will become the first country to leave the euro have eased.

German lawmakers overwhelmingly passed a bill for a third bailout for Greece in the Bundestag on Friday afternoon, overcoming perhaps the largest hurdle to a deal that Chancellor Angela Merkel labeled a “last chance” for Athens.

But at the end of the bruising battle of recent months, lasting damage has been done to allegiances within the euro zone; many wonder now whether the bad blood over the benefits and problems with austerity will persist.

Those in favor of a rescue have carried the day – for the time being.

Chancellor Merkel reiterated before lawmakers that she sees more “advantages than disadvantages” in a new bailout package for Greece. French President François Hollande talked this week of a victory for Europe, and even U.S. president Barack Obama has expressed relief that a “Grexit” has been avoided.

Despite the positive rhetoric from leaders, there is still deep skepticism about whether the fragile truce agreed last week will stand the test of time. This is especially true in Germany, Europe’s largest economy and Greece’s largest creditor. The decision to give Greece its third bailout in five years is deeply polarizing here.

Some 119 German lawmakers opposed the bailout in the afternoon vote – half from Ms. Merkel’s own governing party – and another 40 abstained, while 439 voted in favor. A highly fractious debate ahead of the vote showed that, even as lawmakers prepared to pass the three-year bailout, the questioning continued.

Germany’s finance minister, Wolfgang Schäuble, is stubbornly holding onto his view that a “Grexit” might be the best thing to do for Greece.

“It might be a better option for Greece,” Mr. Schäuble said of a plan he proposed last weekend for Greece to temporarily leave Europe’s common currency, in an interview with the German radio station Deutschlandfunk Thursday morning.

His view is in direct contradiction with his boss, Chancellor Merkel, who spent 17 hours last weekend and into Monday morning negotiating a deal that would help keep Greece a member of the 16-year old euro, a common European currency that includes 19 nations and stretches from Ireland in the west to Latvia and Estonia in the east.

Following the weekend deal, a parliamentary vote in Greece Thursday morning in favor of structural reforms paved the way for E.U. finance ministers to ease their stranglehold on Athens’ shaky finances later in the day. Banks in Greece are set to re-open Monday after being closed for three weeks.

Today, Germany’s parliament had its say on last weekend’s agreement. Despite much grumbling in some quarters, the Bundestag cleared the way for formal talks to begin on a third bailout for Greece – a three-year rescue program totaling as much as €86 billion, or $93.6 billion.

Even as solutions are agreed, the doubts about what’s best for Greece remain widespread.

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