ATHENS: There are no good outcomes for Greece in the seemingly interminable tragi-comedy of negotiations with the Troika over further bailout funds.
Anyone who thinks that Greece has nothing to lose by leaving the euro because the Greek economy has already sunk so low that things couldn’t possibly get any worse needs to take a reality check. It can go a lot lower yet, and certainly will in the event of a messy exit. Yet in the choice between two bad outcomes, Grexit looks increasingly like the better one.
Whoever you think primarily responsible for Greece’s predicament, there is absolutely no doubt that Greece needs meaningful debt relief. Europe doesn’t offer such a solution. To keep the country in a state of permanent penury in the hope that this might provide the incentive to reform, which is in essence what the hated Troika proposes, is no kind of a strategy at all, even as a warning to others on the dangers of fiscal excess. Denied debt forgiveness, Greece will inevitably be back, cap in hand, in a few years time, and the crisis will kick off anew.
High minded economists are prone to argue that even a bad deal to keep Greece in is better than no deal, given the risks if the euro breaks apart. I can’t agree. From the start of the crisis, Europe has faced a binary choice – save the euro, or save the economies that make it up. Thus far, it has consistently chosen the former. Unforgivably, the International Monetary Fund, which stormed out of talks last week in frustration at Greece’s obstinacy, has coalesced in this madness.
