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Paving the way

Dagmar Breitenbach
March 9, 2012

About 85 percent of private investors holding Greek government bonds are participating in a bond swap. The Greek media on Friday celebrated the agreement as a big success, but experts warn the crisis is not over yet.

Greek flag and crowd
Image: picture-alliance/dpa

The Athens daily 'Kathimerini' reported about the "biggest debt writedown in world history" that paved the way for a new bailout package for Greece. The paper praised Prime Minister Lucas Papademos' government for successfully finalizing the difficult negotiations as well as the country's major political parties who finally found a common approach.

'To Vima', the country's leading online news portal, also regards the bond swap as a success: private creditors' losses on the value of their investments mark "an important step to save the country." With some satisfaction, 'To Vima' continues: "Greece will stay in the eurozone and in the EU, even if some people don't like that fact."  But the portal warns of too much elation: "The swap was a step in the right direction, but now it's up to us to successfully continue on this consolidation course.“

A beautiful haircut

The daily "Ethnos" sports a casual headline: "A beautiful haircut!" - a play on words the Greek media often resorts to as the Greek word "koúrema" stands for haircut as well as debt writedown.

The paper expects the government will expand the current quota of private investors participating in the writedown from 85 percent to more than 96 percent by insisting on the collective action clauses in the bonds' fine print. That would force most remaining investors to participate in the deal.

The SKAI TV station also expects the Greek government to apply the clauses, saying the legal conditions are in place for a majority of investors voluntarily agreeing to the debt swap. Whether the clauses are used is a political decision, the broadcaster said.

An "historic moment"

Panos Tsakloglou, an economics professor at Athens University, said so many investors participated that the government can now activate the clauses. But the economic expert also warned of deviating from the path to save the Greek economy. The writedown was a pre-condition for the second bailout package for Greece -  but the real condition for fresh economic aid is the continuation of urgently needed structural reforms, Tsakloglou said. 

Author: Jannis Papadimitriou/db

Editor: Neil King