A deal by Greece’s creditors to release more bailout monies won’t save the country nor provide debt relief, the New York Times said in an editorial criticizing what it called failed policies.
“European leaders congratulated themselves last week for reaching an agreement to provide more loans to Greece and eventually ease the terms of the country’s huge debt. But there is little to celebrate,” the paper said in an editorial
It noted that “Greece is bankrupt in all but name,” because it has a debt of more than 300 billion euros ($333 billion), some 180 percent of Gross Domestic Product, which can never be repaid while its lenders keep pretending it can.
Most of that money is owed to Germany, France, Italy and other countries in the Eurozone as well as banks and the International Monetary Fund, all getting rich on the interest charged for the exorbitant amounts, and reluctant to give Greece any break.
The lenders meeting in Brussels agreed to release another 7.5 billion euros ($8.36 billion) in a staggered third bailout of 86 billion euros ($95.82 billion) but only after Prime Minister and Radical Left SYRIZA leader Alexis Tsipras rammed through Parliament an austerity bill further crushing people he vowed to protect.
Tsipras said that would lead to debt relief talks but Germany – the biggest contributor – made the IMF back down from the same demand and Greece will get consideration of a break sometime in 2018, but maybe not even though, handing the Greek leader and embarrassing setback.
“The reality is that Greece can’t be squeezed any harder. But the finance ministers are seeking still more spending cuts and increased taxes,” The Times wrote.
The EU finance chiefs want Greece to attain a nearly mathematically-impossible primary budget surplus of 3.5 percent of GDP by 2018 at the same time tax revenues are far off target despite massive hikes that have forced otherwise law-abiding taxpayers to try to join the legions of cheats hiding their money.
“A stabled and fast-growing country might be able to hit that target, but it is preposterous to expect that from Greece,” the paper added.
The IMF wanted a more realistic figure of 1.5 percent but even that doesn’t include interest on debt, the cost of running cities and towns and state enterprises, the military or the money-bleeding pension system.
With an unemployment rate still at 24.4 percent, not far off the record high with six years of austerity devastating the economy, the paper said that delaying meaningful debt relief for two more years makes a mirage of the deal with the IMF saying the debt ratio would grow to 250 percent of GDP, impossible to repay.
Greece wants at least a lower interest rate and a longer time to repay – the IMF suggested starting payments in 2040 instead of 2022, with 40 years to do so at a fixed rate of 1.5 percent, rejected by Germany and the EU.
The Times said the EU and Eurozone “simply do not have any ideas, besides imposing ever more austerity, for resolving the crisis in Greece,” blaming German Chancellor Angela Merkel for pushing back debt relief talks until after the Federal elections in 2017.
“While it’s understandable that German lawmakers are reluctant to admit that the debt won’t be paid in full, delaying the discussion about debt relief will not make this problem go away,” the paper said, even though most Germans don’t want to help Greece any more.
Three bailouts totaling 326 billion euros ($363.23 billion) have not slowed Greece’s ascending debt, still rising despite a previous government stiffing investors with 74 percent losses in their holdings of Greek bonds.
The Times said the IMF should pick up the case again for debt relief after surrendering to Germany.
It said, in an ominous ending: “This crisis will never end if European leaders keep pushing policies that have repeatedly failed.”