Running the Greek Marathon

As expected, Greece’s parliament passed the newly agreed-to austerity package by a hefty margin on Sunday, underscoring the government’s commitment to preventing a disorderly default and staying in the eurozone.

Good news, indeed! But an obligatory reminder: Greece is running a marathon, not a 100-meter sprint, and the finish line is a long way off. Sunday’s vote was simply a key mile marker, and passing it likely gives Greece the momentum it needs to reach the next aid station—a bailout dispersal to fund its €14.5 billion bond repayment due March 20.

And, to carry our metaphor just a bit further, the road ahead isn’t without potholes. Under the current agreement, the Greek government must cut another €325 million from 2012 spending by Wednesday to qualify for the disbursement, and eurozone finance ministers must approve the bailout (they’re scheduled to meet Wednesday). They’ll also need to approve Greece’s private-sector debt-restructuring deal, which reportedly has banks taking a 70% net loss on Greek debt holdings—we’ll know for sure when/if it’s unveiled, likely on Friday. Then, the German legislature must approve the entire package. Which is probable, considering Chancellor Angela Merkel has retained her majority in all previous such votes, but not automatic, given the deepening divides within the Bundestag.

All that, of course, is just to finalize the larger bailout agreement—the troika still must approve the actual aid dispersal. That likely only happens if Greek leaders implement enough of the measures passed Sunday and if the heads of the two main parties, PASOK and New Democracy, sign letters of intent to continue implementing reforms after April’s general election. EU leaders are targeting their early March summit as decision day, giving Greece nearly a month to demonstrate credible reform progress.

That, too, may prove easier said than done. Sunday’s vote took place amid a backdrop of violent anti-austerity protests in Athens, and though the protestors are only a small subset of the Greek population, it’s not a stretch to say the wage and pension cuts are rather unpopular overall. Now, most Greeks understand these adjustments, while painful in the short term, are necessary to get their country needed funding, and they support the government’s efforts to stay in the euro. Most members of Parliament also understand the need to push through. But 43 members of PASOK and New Democracy rebelled during Sunday’s vote, and if civil unrest persists, we may see more legislators take a populist stand to curry voters’ favor before the election. That likely won’t derail austerity implementation, but expect it to go slowly and perhaps down to the wire—as it generally has at every milestone thus far.