Greece Just 20 Days Away from Default

If Greece’s political parties do not submit their written commitment to austerity measures to euro-zone finance ministers by November 29, the country won’t receive a critical aid payment and will run out of money in about 20 days.

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Jean-Claude Juncker, who leads the group of euro-area finance ministers, said Greece’s political parties will submit their written commitment to austerity measures by Nov. 29.

“We had expressed the view during our meeting of the eurogroup on Nov. 7 that we’ll be given a letter from the new Greek prime minister ensuring us that all the commitments will be respected and we would like to be sure that this view to be expressed by the new Greek prime minister” is shared by the main political leaders in Greece, said Luxemourg Prime Minister Jean-Claude Juncker, who leads the group of euro-zone finance ministers, after meeting with Greek Prime Minister Lucas Papademos.

The group of finance ministers is scheduled to next meet on November 29 at 5 p.m., at which point they expect to have the written commitment, and will then decide whether to disburse Greece’s next 8 billion-euro tranche of aid from its first bailout.

“It’s up to the Greek government and political parties to check if ‘yes’ or ‘no’ to a cross-party agreement,” Juncker said. “Would there be no cross-party agreement, the next disbursement would not take place.”

And without that disbursement, Greece will run out of money in about 20 days, Greek and euro-zone officials said Tuesday. “Without the loan tranche, we will default on the 2.8 billion-euro bond payments in December and we won’t be able to pay out salaries and pensions,” a senior Greek government official said.

An EU diplomat said that Greek Prime Minister Lucas Papademos received a renewed warning on Monday from European Commission President José Barroso and European Council President Herman Van Rompuy in meetings in Brussels. Papademos met with Juncker today in Luxembourg.

New Democracy leader Antonis Samaris remains the main obstacle to Greece’s ability to give finance ministers what they want, as he has thus far refused to sign the pledge, as he fears voters will see his doing so as breaking a promise to renegotiate Greece’s bailout loans if he comes to power.

Dutch Finance Minister Jan Kees de Jager has said that future financial aid for Greece will be terminated if Samaras doesn’t support the reforms in writing. “I don’t understand why they are so difficult,” Jager said, referring to Samaras and his party. “We have to be assured that they are committed to undertake reforms.”

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The loan payment upon which hinges Greece’s fate represents would represent the sixth disbursement of aid under an existing 110 billion-euro bailout Greece received in May 2010 from its euro-zone partners and the International Monetary Fund.