After an election built on promises, what can Greece’s new leadership deliver?

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• GWEN IFILL:

  Absent agreement, the current bailout plan expires at the end of the month.

  From the streets of Greece to the floors of international markets, we look at what's at stake in the standoff with journalist John Psaropoulos in Athens and Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics.

  John Psaropoulos, what started this? Why the breakdown on Monday?

• JOHN PSAROPOULOS, Independent Journalist:

  I think that the problem centers around the fact that you have got a left-wing, radical left-wing government in Athens, which wants to go fully, frontally against the whole concept of austerity across the periphery of Europe.

  It wants to raise the banner of sovereignty and self-determination within Europe, in other words, telling Germany that it can't tell other countries what to do with their national budgets and their economic and fiscal policies. And I think that a lot of the acrimony that's been seen, and not just on Monday, but also in last week's Eurogroup, has centered around the political symbolism of that standoff, not so much the substance, the fact that the Greeks are being told by the Germans that they're running economic deficits, and they're coming back to the Germans and telling them that they are running democratic deficits.

  And both sides, of course, are saying that both these deficits are going to be detrimental to the future of Europe. So the Greeks are trying to present themselves as being on an equal footing, even though they are the debtors in this argument.

• GWEN IFILL:

  Jacob Kirkegaard, does this kind of political and economic standoff mean sure disaster for Greece? Are they headed to a default?

  JACOB KIRKEGAARD, Peterson Institute for International Economics: I don't think we're quite there yet. I think we are in what I would call the political theater season, so to speak, because you do have a Greek — a newly elected Greek government that was elected on a lot of promises of a lot of things they would do.

  And many, including myself, would argue that many of those election promises are at odds with, shall we say, economic reality. So you are in a situation where the Greek government is going to have to renege on many of those promises. And one of the things in which you do that is to at least appear to be fighting to the last drop of blood politically for the interests of the Greek people, et cetera.

  So I don't think we will get a deal until five minutes to midnight, and we're not quite there yet.

• GWEN IFILL:

  John Psaropoulos, I want to bounce some of that off of you, because you're talking to people there, not only the politicians, but also the residents of Greece. And they seem to — this is a very popular government. This is a very popular stand, to push back against the E.U.

  Does the E.U. just seem heavy-handed to the residents of Greece?

• JOHN PSAROPOULOS:

  Well, yes, I mean, a lot of people have now gathered around this government to support it privately and publicly.

  What's remarkable is that opinion polls last week showed that the number of Greeks who support this government now has doubled since the election, compared to the number of Greeks who voted for it. And I think there was a great deal of concern. People are nervous. There's been a slow bank run here. About $17 billion has been withdrawn from banks in just two months.

  People know what is at stake. They know that it's a high-risk strategy to elect an anti-austerity government in the midst of an austerity program. They know how weak Greece's position is in Europe. They know that Greece can be forced to leave the Eurozone if its liquidity is cut off by the European Central Bank and the Eurozone countries.

  So, yes, I mean, people have shown a remarkable kind of courage in, nonetheless, gathering around this government and showing solidarity as much as possible as a nation, rather than as a left-wing faction. Having said that, there are, of course, those who disagree with a lot of the specifics of what Syriza has been saying. They do think that we have sometimes taken a step too far, treaded on European toes and on the traditional values of consensus within Europe.

• GWEN IFILL:

  Syriza, of course, being the political party that was just elected to government, the popular party.

  So what is it that the E.U. is asking for and what can they hope to get realistically?

• JACOB KIRKEGAARD:

  Well, I think there's a two-stage approach here. There is the first approach, or the first stage, where basically the E.U. is telling the new Greek government, you have to ask for an extension of the existing program with Greece.

  And what that basically is saying is, is, it's symbolic. And what it means is that you, a newly elected Greek government, have to accept that, in a currency union, you are not a fully sovereign government and you're not a fully sovereign country. You have to play by the rules. And part of these rules are, you know, agreeing in theory, or in practice, that there is an existing program.

  So, the Greeks have to ask for an extension of that program. Then, once that is done, we can sit down and have longer-term negotiations about, what is the relationship going to look like between the euro area, the other creditors and Greece in the years ahead?

• GWEN IFILL:

  But is there any discussion under way at all about the fact that there may not be a relationship, that this may be the beginning of Greece deciding it's going to exit the Eurozone?

• JACOB KIRKEGAARD:

  I think that the probability of an exit for Greece from the Eurozone is extremely low, because I think, as also John said from Athens, that there is a clear recognition in Greece that there's a lot at risk here.

  And so far, the posturing, if you like, by the Syriza government is popular. But, at the same time, many Greeks, we have seen — and it was mentioned — that more and more people are taking their money out of the bank. So, they're hedging.

  And once the economic consequences, which would be very dramatic for Greece, of a break with the Eurozone — the government is going to run out of money, in my opinion, in a matter of a relatively few weeks. And it doesn't matter that you have a great election program and a lot of public spending you would like to do and a lot of public officials you would like to rehire if you're out of cash.

  So once the screws are being tightened on the Greek economy, which they will very rapidly, I think there will be a rather cruel awakening by the many people who right now at least in the opinion polls support the Greek government.

• GWEN IFILL:

  And we're waiting for another shoe to drop on Fridayand perhaps another one next week.

  John Psaropoulos in Athens and Jacob Kirkegaard here in Washington, thank you both very much.

• JACOB KIRKEGAARD:

  My pleasure.