Greece-EU: When no one really likes a deal
If anything the IMF was softer, recognizing the need for a debt restructuring. If Europe is nothing but a bad version of the IMF, what is left of the European integration project? The pro-Europe élite might have won the battle against Tsipras, but has lost the war. As Europe was to blame for the rise of Tsipras, Europe will be to blame when Tsipras is eventually replaced by more anti-European forces.
... the most important issue is that even this third bailout does not solve the problem. Greek debt remains too high and the Greek resentment against the deal will all but ensure that the reform measures will not be implemented properly. In a few years from now will be back to the same table: possibly with different leaders, most likely with the same problems, certainly with much less faith in Europe.
While the deal is far from perfect, it’s important we now draw lessons. Never again should the pensions and savings of millions of people across Europe be left to hang in the balance of an all-night emergency meeting, with EU governments pitted against each other. Never again should the future of our currency be jeopardised in this way.
To offer Greece a new bailout after everything that has happened doesn’t make much sense. A big group of countries (including Germany) would have preferred Grexit, but France, Italy and others blocked it. Yet the bailout, I am afraid, will not work.
The main reason is not the structure of the Greek economy with its high indebtedness, inefficient public administration and rampant corruption. These things can, in due course, be reformed. But real reform is impossible without leadership, ownership and communication – so this is much more a political problem than a technocratic one.
Greece would need to have political leaders who are convinced of the necessity, importance and usefulness of reforms, and who are committed to them despite the political risk involved.