Greek drama unlikely to end as a European tragedy

THE tiny Mediterranean nation accounts for just 2 per cent of the eurozone economy. Yet the nation's efforts to reduce its 320 billion euro (S$477.8 billion) debt burden are widely seen as the greatest single threat to Europe's bold monetary experiment. On April 24 another acrimonious round of talks with creditors in Riga ended in failure - raising the threat of a debt default, or worse, an exit from the eurozone.

Despite the latest negotiating flop, we believe that the Greek drama won't turn into a broader eurozone tragedy. As of early May, Greece is still several steps away from leaving the union. And even if the worst happens, the eurozone is better placed to cope than it has been in years.

There is no denying that talks on Greece's debt have been going poorly. Greece's radical Syriza-led government has been unwilling to agree to reforms - such as liberalising the labour market, accelerating privatisations and cutting the minimum wage - that creditors insist are required to reinvigorate the economy.