The Hill News

Greek Prime Minister George Papandreou’s decision to ask for a referendum on the "Greek bailout" increases the uncertainty surrounding the eurozone debt crisis.  As Greece burns, is Prime Minister Papandreou looking for political cover? Or, is he taking a calculated risk, attempting to do away with short term fixes and replace them with a comprehensive restructuring that will fix the crisis?
 
Greece is engaged in a restructuring process.  Restructuring negotiations are always complex and involve brinkmanship.  The parties involved attempt to assert the leverage they have to get what they want.  Debtors want to fix their capital structures and operations to put themselves in a situation to compete and grow over the long term.  Creditors want to maximize their recoveries.  And investors want to pay as little as possible for the biggest stake.  The restructuring negotiations with Greece are no different.  Greece wants to reduce its debt and grow its eco! nomy.  The banks want to take as small of a haircut as possible, and the Troika wants to “invest” the smallest amount of cash necessary to avoid a massive default and contagion.  The restructuring negotiations related to Greece are more complex than most because they involve the politics of 17 member states.  And politics may be the card Prime Minister Papandreou is playing, using Greek voters’ sentiments against a bailout and more austerity as bargaining leverage. His political cover, however, may look ingenious at the end of the day if it leads to a comprehensive restructuring plan.
 
What do I mean?
 

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