A restructuring of the Greek public debt will probably come before a permanent stability mechanism is set up in 2013, but its consequences will depend on the way it will be made, a report by Anne Sibert of the London University and CEPR said on Wednesday.
The report, commissioned by the Internal Affairs directorate of the European Parliament, said that the Greek debt was not sustainable despite the opposite opinion of the European Central Bank and European politicians, and Greece will probably default before a permanent stability mechanism begins operations in 2013.
The report examines the possible cost of an early default both for Greece and the Eurozone. The writer of the report uses the word default for restructuring of the debt and not for a complete default.
The report said that the cost of an early restructuring for Greece depends on the way it will be made. If the restructuring was considered as a result of consensus and fair and if Greek banks did not have to record their losses immediately, then Greece could recover soon. But if the restructuring is considered unfair and provocative towards European politicians and institutions, then Greece could be led out of the euro and the EU with possible catastrophic consequences for its economy and its political situation.