Despite dozens of summits, the European economic crisis continues to drag on. Greece remains the crux of the matter. Mired in both an economic depression and a political crisis, progress on reform has been difficult. Social unrest and uncertain prospects of future growth has undermined commitment to economic adjustment, raising concerns over how much longer Greece can even remain in the Eurozone.
It has been difficult for others to agree on how best to help Greece because there are political divisions here as well. These were underscored last week in a public spat between IMF Managing Director Christine Lagarde and Chair of the Eurozone Finance Minsters Jean-Claude Juncker. They debated whether the end goal for Greece should be to reduce its level of debt to 120% of GDP by 2020 or 2022. The potential for this disagreement was present from the beginning. The Eurozone’s contribution to the Greek bailout was 2/3 of the total, with the IMF supplying the rest. The Lagarde/Juncker debate, then, resembles two restaurant goers arguing over the size of the check.