A worrying weekend for the euro zone.
Greece’s coalition government – the guarantor of the country’s bailout deal with its EU and IMF lenders – is down to a wafer-thin, three-seat majority in parliament after the Democratic Left walked out in protest at the shutdown of state broadcaster ERT.
Prime Minister Antonis Samaras insists his New Democracy can govern more effectively with just one partner – socialist PASOK – but the numbers look dicey, although it’s possible some independent lawmakers and even the Democratic Left could lend support on an ad hoc basis.
Samaras has ruled out early elections and says the bailout – without which default looms – will stay on track. If the government fell and elections were forced, the likely beneficiaries would include the anti-bailout leftist Syriza party which, if it got into government or formed part of one, really would upset the applecart.
Just as alarming was the failure of EU finance ministers – after talks that went through the night well into Saturday – to agree how the bill for future bank failures should be paid. There were problems with those countries outside the euro zone as to how they should fit into the mechanism. But the disagreement was chiefly between France and Germany, principally on how much leeway countries should have to impose losses on bondholders and/or large depositors.
As one would expect, Berlin wants minimal wiggle room is order to spare the currency bloc’s taxpayers in future, Paris significantly more. A fresh attempt will be made by the ministers on Wednesday in an attempt to clear it up before their leaders meet on Thursday.