Despite passing more harsh austerity that opened the door to release of delayed bailout funds, sooner or later debt is gonna cut Greece down.
That’s what came out of the deal Prime Minister and Radical Left SYRIZA leader Alexis Tsipras signed, completing his reneging on anti-austerity promises and surrender to the Quartet of the European Union-International Monetary Fund-European Central Bank-European Stability Mechanism (EU-IMF-ECB-ESM).
In an analysis for The Financial Times, economic writer Yannis Palaiologos, said despite the imminent release of some another 10 billion euros ($11.11 billion) from a third rescue package of 86 billion euros ($95.58 billion) agreed in August, 2015, Greece may be too far gone to be saved just yet.
Tsipras did not get the game-changer he wanted: debt relief. He’d like an outright cut in the 326 billion euros ($362.32 billion) owed overall, including for two previous bailouts before he came to power, and during which he criticized governments for agreeing to austerity, only to do exactly the same when he came to rule.
The deal stipulates only that debt relief would be discussed in two years – if his wobbly coalition with the pro-austerity, far-right, jingoist Independent Greeks (ANEL) lasts that long, although lawmakers in the two parties have been in lockstep agreement with reneging on promises.
Greece could get a longer time to repay at a lower interest rate but there are no signs it will help slow the debt ratio nearing 180 percent of Gross Domestic Product (GDP), an unsustainable figure taught in any Economics 101 class.
It’s been six years since the bailouts and austerity began – hammering workers, pensioners and the poor while letting tax cheats, the rich and politicians escape – and Greece just keeps slip sliding anyway and nothing in the new deal will change that.
Greece is committed to reaching a primary surplus – not including interest on debt, the cost of social security, the military, city and town operations and state enterprises – of 4.5 percent of GDP, an almost impossible goal.
Tsipras also agreed to automatic spending cuts if the benchmarks aren’t reached although insisting – as he has before only to renege on those promises – that Greece is in charge of what would be cut, belying the agreement he signed.
“There is no end in sight for this sorry tale. This week’s deal, for all the efforts of Eurozone officials and especially the Tsipras government to put a brave face on it, is anything but a game-changer,” Palaiologos wrote.
“Subject to the Greeks meeting the last, humiliating elements of the imposed conditions, the money that will be disbursed will prevent another default this July and will keep the country funded through most of the rest of the year,” he added. But that’s it.
He noted that Greece remains mired in a long, desperate depression. It has lost a quarter of GDP since its pre-crisis high in 2007.
The unemployment level has hovered around 25 per cent for four years, and youth unemployment has been above 50 per cent for even longer. Pensions have been cut more than a dozen times, yet pension spending relative to GDP, both total and by the government, is among the highest in the developed world.
“The country’s best and brightest are leaving for more promising lands in droves, and those who are left behind are increasingly fatalistic and indifferent to the institutional collapse that has been gathering pace since Mr. Tsipras became Prime Minister.”
It’s been the same sand-in-the-face for him as for the leaders and governments he criticized which came before him and now has brought Greece 326 billion euros ($362.28 billion) in debt no one believes can be paid but pretends it can until some year it’s the headache of some other government and new EU leaders.
“This should surprise no one,” Palaiologos added. “Greeks elected terrible political leaders who led them to bankruptcy and bungled its rescue programs.” Just as they always have.