Despite latest cuts, Greece still faces bailout obstacles

BRUSSELS – Greece faces further hurdles before it can receive a second, $171 billion bailout, despite its lawmakers voting through more austerity measures in the face of violent protests.

The European Union’s Economic Affairs Commissioner Olli Rehn on Monday called the Greek parliament’s approval of a further round of budget cuts a “crucial step forward,” but Germany insisted it would still take some time before the bailout is delivered.

Germany, which as Europe’s biggest economy pays the largest part in bailout deals, said it wouldn’t give its final approval for the payments until early March – after it becomes clear how many banks and investment funds are willing to take losses on their Greek bonds and the parliament in Berlin votes on the new measures.

Pushing the new bailout back means that Greece, its citizens, and the rest of the world economy won’t know for several weeks whether the country can avoid a potentially disastrous default. A bankruptcy could force Greece out of Europe’s euro currency union, drag down other troubled eurozone countries and further roil global markets.

The uncertainty over European Union financial reforms and the region’s weak economic outlook led the rating agency Moody’s Investor Service to downgrade its credit ratings on Italy, Portugal and Spain, while lowering the outlook for its ratings on France, Britain and Austria to “negative” from “stable.” Moody’s also cut its ratings on Slovakia, Slovenia and Malta.

German Finance Minister Wolfgang Schaeuble stressed that Europe was doing everything it could to help Greece avoid bankruptcy, “but Greece itself of course must want that.”

Greece’s leaders scrambled over the weekend to get new austerity measures through parliament ahead of Wednesday’s meeting of finance ministers from the 17 euro countries. The cuts debated Sunday included axing 1 in 5 civil service jobs over the next three years and slashing the minimum wage by more than a fifth.