It’s the season when Greece’s continuing debt saga approaches what has now become a familiar summer climax, with citizens protesting austerity cuts and international creditors squabbling over the terms of loans. It’s time to exit this cycle and face reality: Without relief, Greece’s economy will never recover, with repercussions the European Union can ill afford.
Last July, the government of Prime Minister Alexis Tsipras was forced to accept a raft of austerity measures imposed by international creditors in order to receive a bailout. This has taken a toll, and around a quarter of the population is unemployed.
Still, on Sunday, Greek legislators approved an additional 5.4 billion euros in austerity measures, the day before European finance ministers met in Brussels to discuss whether Greece was meeting the terms of last year’s bailout program and could qualify for an infusion of 5.7 billion euros. Greek citizens were in the streets protesting the idea of more cuts. .
But, Europe’s finance ministers failed to agree on whether Greece had made enough progress, putting off a decision until they meet on May 24. They are also balking at an International Monetary Fund demand that Greece get debt relief when the bailout program ends in 2018. The I.M.F. is threatening to pull its support from the program if that relief is not offered.
The problem is Germany, Greece’s main national creditor: German federal elections will take place next year, and many German citizens feel their hard work and thrift should not be squandered on rescuing the Greeks from the pain of their fiscal sins.
Last year, Germany threatened to oust Greece from the European Union and the euro if it didn’t deliver on austerity measures. Given Greece’s front-line position in Europe’s refugee crisis, Germany can no longer afford to threaten Greece. The last thing Europe needs is a “failed state,” as Greece’s finance minister, Euclid Tsakalotos, warned on Saturday, on its border with Turkey.
When Europe’s finance ministers reconvene, they would do well — for Greece, for the European Union and for Germany — to approve the July release of funds and agree to debt relief. Greece has gone a long way to satisfy austerity demands, but without debt relief its crisis will never end.