ATHENS - Despite three bailouts that have failed to slow Greece’s rising debt problem, European Stability Mechanism Managing Director Klaus Regling said the country can still recover, but only if it keeps imposing reforms and austerity measures that have brought political ruin to several successive governments.
In an op-ed published in Frankfurter Allgemeine Zeitung newspaper, Regling compared the experience of Ireland, Portugal, Spain and Cyprus, where bailouts brought a “successive conclusion as he said,” with the situation in Greece, which he described as a “special case.”
“In no other country were difficulties so big and the public administration so weak,” he said of Greece. “This is why efforts to stabilize (the country)have yet to be completed after seven years of austerity,” he said.
Greece’s public sector is notorious for laziness, inefficiency and featherbedding, with generations of governments padding public payrolls with supporters in return for votes, helping create the crisis that led to the need for bailouts to prop up a failing economy.
The ESM, along with the European Union and European Central Bank, makes up the Troika that is giving Greece a third rescue package, this one for 86 billion euros ($101.66 billion) although Regling also said he doesn’t think Greece will need all the monies from the last package.
The EU and ECB had joined with the Washington, D.C.-based International Monetary Fund (IMF) in providing two previous bailouts totaling 240 billion euros ($283.69 billion).
Prime Minister and Radical Left SYRIZA leader Alexis Tsipras, in continuing to renege on promises to reverse pay cuts, tax hikes, slashed pensions and worker firings, agreed to more pension cuts and taxes on low-income families in return for release of 8.5 billion euros ($10.05 billion) from the third bailout.
Greece in July also sold a 3 billion euro ($3.55 billion) bond in July, although at interest rates more than three times higher that what it’s paying its creditors and despite cautions from the IMF and Bank of
Greece Governor Yannis Stournaras it was too early and too costly.
With the bailouts ending in mid-2018, Tsipas has been advised by the lenders to keep pushing the reforms and austerity that have driven him to only about 10 percent popular support.
Regling said the Eurozone, the other 18 countries besides Greece using the euro, could finally agree on debt relief after the bailouts end if Tsipras continues to follow the Troika’s orders and demands, although Germany remains fervently opposed to a debt break.