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Greece bailout: What's the future of the euro?

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But the rules of the euro prohibit bailouts of the kind Greece may yet need. EU leaders sought last week to craft a bailout by another name that would circumvent those rules through provision of bilateral loans.

Why has the possibility of an intervention by the IMF been raised?

The eurozone’s dominant member, Germany, had stubbornly refused to endorse a Greek rescue package, insisting that Greece must get its own house in order through austerity measures. Berlin, seeking to limit its own responsibility for Greece’s problems, has argued for IMF involvement despite misgivings by France.

Germany’s chancellor, Angela Merkel, said March 15 that European governments should only help Greece when it is “at the brink of bankruptcy, which it luckily is not at the moment.” If aid was required, “the IMF is a topic we need to look at,” she insisted.

IMF involvement may be positive for Greece, since it’s likely to lend at lower interest rates than the European powers. Despite Greek promises to cut government spending to reduce a budget deficit of 12.7 percent of gross domestic product (GDP), a backlash from Greek unions has raised questions over follow-through.

Why is Germany so reluctant to lead a bailout of Greece?

After years of saving, increasing productivity, and debt control, Germany is leery of helping a country that has done exactly the opposite. Almost one-third of Germans believe Greece should be asked to leave the eurozone, while some 40 percent think Europe’s biggest economy would be better off outside the single currency, according to a Financial Times poll.

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