As Greece’s new finance leader Yanis Varoufakis began his “charm offensive” to convince European leaders to alleviate the country’s debt burden, 100,000 Spanish sympathisers flooded the streets of Madrid to call for an end to austerity.
Striking images of the Madrid march show elated protesters from the Podemos movement, which means “we can”, waving banners and flags, including that of Syriza, the new anti-austerity Greek party.
Meanwhile, Greece has hired the investment company Lazard to advise on restructuring its debt, and has refused to deal with the “troika” – a committee of representatives from the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB), which is pushing for continued austerity under the terms of the country’s €240bn bailout, agreed in 2010.
Syriza, which rose to power on a pledge to reject the troika’s terms, has said that it will work with the IMF, ECB and European Commission directly, but is not prepared to strike a deal with their intermediaries.
“What could happen now is that Greece may not get its bailout money at the end of February from the troika, which is about €7bn,” said the BBC’s correspondent Mark Lowen.
“That would mean that Greece would be able to pay its debt obligations later in the year, that are several billion euros. That could then lead to emergency funding to Greece being cut off, and this country, in effect, to print its own money and devalue, and then its place in the Euro would be under threat.”
While being forced out of the Eurozone could prove disastrous for Greece, international treasury experts have dismissed the threat as remote. Deborah Cunningham, Chief Investment Officer at Federated Investors, suggested that the damage this could do to Europe as a whole makes a Greek exit highly undesirable, adding: “we don’t rate the likelihood very high.”
But, with anti-austerity movements spreading across Europe, the future of the Euro seems uncertain.
Meanwhile, Switzerland’s decision to unhook its value from the Euro has led to heated debate over the currency’s future, while the Russian rouble has continued to plummet, fuelled by the country’s decision to cut the key interest rate from 17% to 15%.