The confidence vote in Athens was the easy part.
Now that the Greek Parliament has cast its vote expressing confidence in the socialist government of prime minister George Papandreou, the government will quickly move on to building support for the austerity plan the IMF is requiring before delivering the next tranche of funds under the EUR110 rescue facility.
The newly-appointed Finance Minister, Evangelos Venizelos, has promised that Greece will speed up the required votes on its latest austerity plan. The plan will actually require two votes—one on the plan itself, another on other measures required to implement it.
Venizelo said Tuesday that both votes would occur before European finance ministers meet on July 3 to decide whether to give Greece the next tranche of the bailout funds.
In addtion, EU officials will be meeting later this week in Brussels, where they will consider a new three-year Greek bailout package. They will bed under pressure to agree to a deal in principle, with details to be worked out later.
The debate over a new bailout will surely turn around the participation of private creditors. Chancellor Angela Merkel of Germany has been insisting that private creditors be required to rollover existing debt—essentially extending existing credit lines.
Banks and institutional investors would remain exposed to Greece.
Fitch, the least influential of the three big ratings agencies, through a monkey wrench into these plans, saying that it would consider a voluntary rollover of Greek debt as a default. It’s not clear if Moody’s and S&P would take the same stance.
In short, the Greek drama is not over yet. Not by a long shot.
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