Europe Faces New Greek Test
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Political tumult in Greece stoked new worries about the fragility of Europe's monetary union on Monday, as talks to form a new government among the winners of the weekend's elections quickly fell apart in Athens, The Wall Street Journal reported. The collapse revived fears that political turmoil will keep Greece from meeting the stiff terms of its European bailout, ultimately leading to its exit from the euro zone, a move that would threaten the euro's future and reverberate through other troubled economies, such as Spain and Italy. The drama in Athens came against a backdrop of broader shifts in the Continent's politics, a day after voters fatigued by austerity in France, Greece and elsewhere came out in force against incumbent leaders. On Monday, German Chancellor Angela Merkel reiterated that her government won't soften austerity demands embodied in the euro-zone fiscal pact, rejecting a call by France's Socialist president-elect, François Hollande, to renegotiate the treaty. In Italy, meanwhile, a group of anti-establishment parties gained ground in local elections, preliminary results showed, in the latest sign that voters across Europe are fed up with their leaders' response to the debt crisis. Greece has to pass a series of austerity measures in the coming weeks in order to secure its next tranche of international aid. Without the assistance, Greece would run out of money within weeks, forcing the country to reintroduce its old currency, the drachma. Read more. (Subscription required.)