Can Greece avoid a descent into hell?

Forming a unity government is a vital step but Greece must act quickly to secure its latest bail-out

Can it be true that Dante Alighieri, the father of Italian language, wrote his fourteenth century epic poem Divine Comedy with Greece in mind? Indeed the spectacular collapse of Greece brings to mind his Inferno – hell – the first part of the poem. Dante believes that Hell is an inverted cone consisting of nine circles; the more you go down, the more you are trapped.

What matters for us is the third circle. Indeed, in the third circle, Cerberus, a mythical hound with three heads, prevents the Gluttons, the greedy eaters, from escaping. Last year, Greek deputy prime minister Theodore Pagkalos commented that: "We ate everything together," a spectacular comment meant to admit that all politicians share a blame for Greece's downfall. With this in mind, it is natural to interpret Greeks as modern versions of Gluttons, and see the troika – that is, economic advisers from the European Commission, the European Central Bank and the International Monetary Fund – as a modern version of Cerberus.

Indeed, less than two weeks ago, the troika thought that they done Greece a favour by putting together a new bail-out package aimed at reducing the country's debt burden currently in the hands of private bondholders by up to 50 per cent. Nevertheless, the new bail-out package is up in the air. With Prime Minister George Papandreou's referendum idea on the bail-out package spectacularly backfiring, Greece and perhaps the entire eurozone appears to be on the brink of collapse. Greek political parties need to move extremely quickly to finalise the government of national unity. It should be led by a well-respected Greek, like former ECB vice-president Loukas Papademos, and have three straightforward objectives.

First, drop the referendum idea and secure the bail-out deal put on the table by troika. Although the referendum idea has now been ditched, securing the latest bail-out deal appears extremely doubtful. This is because Europeans have a very good reason to judge Greeks as both unpredictable and, based on their recent history, unreliable. Second, reassure Europeans that Greece is still committed to eurozone membership. However, this might not matter at all as eurozone leaders appear fed up with the Greeks. And third, move immediately from words to swift actions. That is, proceed with all necessary structural reforms, such as privatisations and the opening-up of closed professions. to improve the country's international competitiveness.

The problem, of course, is that eurozone leaders now openly admit that Greece might have to go. In any case, Greeks should hurry up to complete the formation of the national unity government before they are thrown out of the euro and descend to the ninth and very last circle of Inferno from which there is definitely no comeback.

Costas Milas is professor of finance at Liverpool University's Management School, in the UK