Editorial
The Eurozone’s Damaging Deal for Greece
By THE EDITORIAL BOARD
JULY 13, 2015
Credit Tim Lahan
In the end, after trying every possible tactic, Prime Minister Alexis Tsipras of Greece threw in the towel and accepted the toughest demands yet made by creditors to extend life support for Greece and keep it in the eurozone. That may avert an immediate catastrophe, but there is little to celebrate since it will do little to address, much less repair, the slow-moving disaster of the Greek economy.
The Greek Parliament has to approve the main portions of the package by Wednesday just to start negotiations on a new three-year bailout of up to 86 billion euros ($96 billion). Despite pleas from the Greeks for debt relief, the creditors gave only vague indications that they might consider easing terms on Greece’s total debt of more than 300 billion euros, which it cannot possibly repay.
Mr. Tsipras certainly didn’t help his cause with the European leaders by calling for a confusing last-minute referendum, in which Greek voters rejected an earlier bailout deal. And now his capitulation has enraged members of his left-wing Syriza party, raising the possibility of another national election, with the attendant unknowns, or at least a thorough reshuffling of the government.
The guiding notion behind the creation of the European Union was to resolve problems like this through consensus and cooperation. Instead, the final 17-hour negotiating session was marked by acrimony not only between Greece and the European leaders, but also between Germany and France; between the German finance minister and the head of the European Central Bank; between north and south, east and west.
So the tragedy is not only that the Greek debt crisis has no end in sight, but that instead of the one-for-all-and-all-for-one ethic that was supposed to govern Europe, the rancorous talks showed a roomful of national leaders with sharply differing conceptions of what to do about a bankrupt fellow member.
The Greek Parliament is likely to accept the deal, if only because there is no choice. Austerity will remain firmly in place, and the increased taxes and reduced pension payments imposed in the package will only further erode the demand that the Greek economy needs to avoid a deepening depression. The deal also requires that a fund be created to sell off public assets worth 50 billion euros to repay debts and recapitalize banks, a condition hard for a socialist government to swallow, and continued monitoring of Greece’s adherence to bailout terms by the International Monetary Fund.
Chancellor Angela Merkel of Germany, the one who should be most dedicated to European unity, declared after the deal was sealed that its “advantages far outweigh the disadvantages.”
The one advantage of the agreement reached early Monday is that it buys some time. But unless that time is used to discuss how to really reduce the Greek debt and restore its moribund economy to life, it will not be long before eurozone leaders are locked in another agonizing debate about what to do. Germany and its allies have driven a hard bargain, but in forcing Greece to submit they have not resolved the crisis of the monetary union or advanced the European project.
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