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A protester throws a stone at policemen during riots in Athens this month.

JOHN KOLESIDIS/John Kolesidis/Reuters

Now that euro zone finance ministers have managed to punt the hot-debt football into Greece's end zone, the question is whether the insolvent Greeks will meekly yield to the harsher budget cuts and other conditions demanded in exchange for more bailout money. Or will they try to manoeuvre the ball back into the other end?

Most observers assume the flat-broke government has no choice but to accept the terms set by its euro zone partners, no matter how onerous or politically suicidal those may be. The consensus is that a slim parliamentary majority will enable the newly revamped government of Prime Minister George Papandreou to prevail in a crucial confidence vote Tuesday on the stiff austerity measures, which will pave the way for the euro cash and the next instalment from the International Monetary Fund.

"Our base case is that the confidence is retained and the medium-term fiscal plan is approved (possibly with some changes, brought about by the new finance minister)," Barclays Capital says in a report. "A cross-party agreement in the near term, which would be a clear positive, is more unlikely, though."

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But Athens is not without a few defensive weapons of its own, no matter how the vote turns out. The beleaguered government or an interim replacement could use the mere threat of default and the wide repercussions that would follow to make the next phase of this interminable rescue a little more palatable to the Greek electorate and less damaging to the sinking economy.

The old banker's saw applies: Owe a small sum and it's your problem. Owe so much that a default could trigger another major financial crisis and it's your lenders' sizeable headache.

For the Europeans, it's a case of pay now and keep delaying the day of reckoning - and inevitable Greek restructuring - until French and German banks have written off considerably more of their Greek debt and have stronger balance sheets and Spain is in better economic shape - or put the entire euro zone at grave risk. And we won't even mention the potential for a global financial nightmare when vast amounts of credit default swaps on Greek debt have to be covered. Just ask Washington, which ignored the warnings of a global derivatives disaster when it pulled the plug on Lehman Brothers in 2008.

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About the Author
Senior Economics Writer and Global Markets Columnist

Brian Milner is a senior economics writer and global markets columnist. In a long career at The Globe and Mail, he has covered diverse business beats, including international trade, the automotive industry, media, debt markets, banking and the business side of sports. More

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