Greece’s direction will have deep ramifications for the 17-country euro zone, where leaders have just three days left to guard against the prospect that anti-bailout leaders will come to power here. The Fitch ratings agency warned on Wednesday that if Greece leaves the euro zone, the impact on banks in other struggling European countries would be “severe.”
Spain was pushed to accept a bailout of up to $125 billion to help its banks on Saturday, but the country’s borrowing costs have gone up, not down, since the aid announcement, a dire warning sign of how little investors trust Europe.
In Greece, given a pick between politicians who promise to comply with the bailout’s grinding austerity and those who say they will defy it, but risk their country’s future on the common currency, many voters say they have no good choice.
“It’s not as though the bad politicians are out and the better ones are coming,” said Mary Papakonstantinou, 75, who one day this week grudgingly slapped down a burnt-orange 50 euro bill, about $63, to buy blood pressure medicine for her husband at the cramped Athens pharmacy she has patronized for 40 years.
In better times she baked spinach pies for her pharmacists as a token of neighborliness. Now, though, she’s simply worried about being able to buy her prescriptions. Under ordinary circumstances, the state health insurance system paid her pharmacist directly. Now pharmacists, fed up by delayed payments that they worry may never come, have told their customers that they need to pay cash and try their own luck at getting reimbursement from their health insurance.
Periodic infusions of cash
Greece’s government is surviving on periodic infusions of cash from a $163 billion bailout from Europe and the International Monetary Fund. Those aid payments are on hold with Greece’s government in doubt, and Greek officials say that without more help, they’ll completely run out of money by the end of August.
That would mean no pensions, no paychecks for the more than 600,000 people on the government payroll and no aid for the troubled banks whose fearful depositors, including Papakonstantinou, are pulling out their money while they can. Greek President Karolos Papoulias said last month that depositors withdrew $1 billion on a single day after parliamentary elections in May led to an inconclusive result, though banking officials say that withdrawals have since slowed.