On Europe’s Thanksgiving Menu: Stiffing Greece

The lull is over. After enjoying a long period of relative calm, the eurozone is heading into new turbulence this week as EU leaders meet in Brussels for a scheduled two-day summit. While Americans take the day off to eat their Thanksgiving turkeys, EU leaders are expected to engage in some less-than-convivial sparring over two highly sensitive issues, and the outcome could be a new period of financial instability for the euro. The summit is officially supposed to finalize the EU’s one trillion euro annual budget from 2014 to 2020, but risks ending in acrimony between Britain and its 26 partners over the amount of spending. The British government has signaled that it wants to see significant cuts in the central EU budget at a time when national governments everywhere are reducing their spending – but it’s running up against strong opposition from France and others, who want to maintain the status quo. (MORE: A Deeply Divided European Union Faces Its Own Budgetary Cliff) Even before the EU leaders sit down together, there’s serious tension in the air over the failure early Wednesday by finance ministers of the 17 eurozone countries to reach agreement on a package of loans that Greece urgently needs to pay off debts coming due before the end of this year. An estimated €7 billion ($9 billion) in treasury bills are coming due in December; already last week, Greece had to issue short term debt to roll over about €5 billion of that for another month. At stake is a €44.6 billion ($57 billion) package that is part of a bigger bailout program previously inked with Athens. The process of disbursing the loans has been held up by a dispute between the EU and the International Monetary Fund over whether and how to provide deeper debt relief to the Greek government. The IMF is pushing for European governments to agree to a restructuring that would cut Greece’s debt to 120% of its economic output by 2020. (It’s currently about 176% of GDP). But Germany and some

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