politics | Instabilty in Greece

Whats going on:
Greek protests turn deadly

Why'd that happen?

Teh short version

The longer version

Continuing fallout of the crisis

Europe's days of anxiety

The fear that haunts Europe's leaders is contagion. Axel Weber, a member of the European Central Bank's governing council, said today there is a serious threat of Greece's problems spilling over and spreading to other parts of the eurozone. The head of the IMF, Dominique Strauss-Kahn, also indicated there was a risk of the crisis spreading. In early trading the euro was down again.

So what are the dangers in the days and weeks ahead?

Firstly, although Greece now has enough funds to stave off default, fears remain that further down the road it will have to restructure its debt.

The bigger question is whether the Greek government will fully implement the austerity measures it has agreed in exchange for being bailed out.

Despite the sound and fury on the streets of Athens it is unclear what a majority of Greeks feel. A couple of days ago I spoke to the head of the civil service union, Adedy, which is striking today. The union's argument was not with the bail-out; it was with the terms of the rescue. The unions are aggrieved they were not consulted and what they are after is a reworking of the terms and conditions.

The Greek government, however, has very little room for manoeuvre. Any indication that it was retreating from the deal it has signed would set off alarm signals, particularly in Germany. Austerity is the price for the German billions being loaned. MORE

Greek protesters urged to retreat from 'abyss'

Greece is "on the brink of the abyss", President Karolos Papoulias has warned, after three people died during protests over planned austerity measures.

"We are all responsible so that it does not take the step into the void," the president said in a statement.

It followed a day of violence during which protesters set fire to a bank, killing three employees.

Greece's government has vowed to pursue the spending cuts - a condition of its 110bn euro ($142bn; £95bn) bail-out.

"We are prepared to pay the heavy political cost," Finance Minister George Papaconstantinou told parliament during Wednesday's debate on the bill.

"We will not take a single step backwards."

The euro hit a fresh 13-month low against the dollar and European stock markets were also hit, amid concerns over Greek bail-out plans. MORE

We will continue to watch developments, and hope that it works out with as little damage as can be managed at this point.