Greece's grim choice: deep budget cuts or default

WASHINGTON — Why would Greece accept more pain when unemployment is at 21 percent, the economy is enduring its fifth year of recession and rioters are hurling gasoline bombs in the streets of Athens?

Because the alternative might be worse.

Greek leaders are gritting their teeth as they move forward with a plan to further slash spending in return for a bailout of about $172 billion (€130 billion) from other countries in Europe and around the world. The Greek Parliament is scheduled to vote on the plan Sunday.

Greece is trapped in a lose-lose predicament: It must deepen an austerity plan begun in 2010 that will throw many more people out of work. Or it must default on its debts, abandon Europe's single currency and see its banking system implode.

"The choice we face is one of sacrifice or even greater sacrifice — on a scale that cannot be compared," Greek Finance Minister Evangelos Venizelos said.

Here is a closer look at Greece's two bleak options:

—Impose deep spending cuts in exchange for the bailout.

The pros:

Greece needs the bailout to make a $19.1 billion (€14.5 billion) bond payment due March 20. Prime Minister Lucas Papademos warned that "a disorderly default would cast our country into a catastrophic adventure."

Papademos said the plan would help lift Greece out of recession next year.

In addition to the $172 billion bailout, Greece is negotiating a deal that would reduce the roughly $264 billion in debt it owes private creditors. Under that arrangement, about $132 billion would be shaved off the national debt and Greece would get more favorable repayment terms.

Selling government-owned companies, exposing professionals like architects and pharmacists to more competition and imposing other reforms is designed to make the economy more efficient in the long run.

Even with the austerity plan in place, the International Monetary Fund estimates it will be 2020 by the time Greece can shrink its debt load to a sustainable level.

The cons:

Such austerity can be counterproductive because it can slow the economy and reduce tax revenue.