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European Union Being Tested by Greek Debt Crisis

Editor’s Note: In an interview with Susan Li on Bloomberg Television's "First Up," Daniel Speckhard, a former U.S. ambassador to Greece, talks about Greece's debt crisis.

Susan Li: Let't get more from a former U.S. ambassador to Greece. Joining us live from Washington DC, we have Daniel Speckhard with us this morning. Mr. Speckhard, good to have you back on the program. So is it surprising to you that one issue that outstandingly continues to wrangle early in their evening here, or late into the evening depends on how you want to see it, is about these pension cuts.

Daniel Speckhard: No, I’m not surprised. People have been talking about the pension cuts and the lowering of the minimum wage being two of the main sticking points. I think it’s good to recall that this austerity program has not just started today or it’s not starting today. The country has been under severe strain for a number of years. The economy has been deteriorating and essentially the people are starting to get frustrated in that they can’t see an end to the cuts. So you see the politicians starting to push back a little, as they get pushed by their constituencies. And, I think, probably most importantly, there is an election on the horizon and we all know, those of us who live in democracies, what happens when there’s elections.

Li: OK, well, right now we have the PASOK party spokesperson, Beglitis, saying that we are pressing up against 2 am in Athens time right now, but they might be meeting again to try to get some deal done. Do you think that might happen? I say, before dawn breaks over in the Greek capital.

Speckhard: I think that will be an enormous effort to get that to happen since the Euro group finance ministers have called a meeting for today here. So it’s going to be enormous pressure on Athens. Whether it actually happens or not I can’t say for sure because that’s politics, but I think you will see this play out either today or tomorrow, you’ll probably get some sort of agreement by the weekend. But the bigger question is will that be enough for the medium to longer term for Greece? So I don’t think this story is going away.

Li: OK, well Greece, in terms of the agreements they have made, pledging permanent spending cuts including a lower pension payment. Also a 20 percent reduction in the minimum wage. Are you encouraged by the agreements thus far?

Speckhard: Well, I think it shows how far the Greeks are willing to go to try to get their house in order and make sure they stay within the Eurozone. WHat I’m discouraged by I have to say is, you know, the IMF is the one that is pushing hard to get this next piece done because they are very skeptical that what’s going to be put together here—the total package of the bailout, the cuts by the Greeks, and the rescheduling by the banks—is going to be enough to provide a sustainable pattern of debt servicing and some room left for growth for Greece. So, I think what you see here is we’re trying to craft and squeak out a package that will just get us through. I hope that will happen, I know the markets are very anxious that that happens. But I think the challenge is going to be that is likely to get us through this step and there’s going to be a lot of skeptics saying, “is this enough?”.

Watch the full interview at bloomberg.com »