A Way Out for Greece
Easing Greece’s debt burden while keeping it within the eurozone is the correct and achievable path out of the country’s crisis, and it can be achieved easily through a mutual accord between Germany and Greece. The result would be a win not only for the two countries – but also for the world economy.
QUITO – The Greek crisis is a tragedy for the country and a danger for the world economy. Germany is demanding that Greece continue to service its debts in full, even though Greece is clearly broke and the International Monetary Fund has noted the need for debt relief. The collision of reality (Greece’s insolvency) with politics (Germany’s demands) was bound to create a disaster. And, indeed, it has: the shocking collapse this week of the Greek banking system.
Yet there still is a way out of this mess. Greece’s debt should be cut sharply, and the country should remain within the eurozone.
In negotiations with its creditors this spring, Greece recognized this, insisting that its debt be reduced. Germany refused. Though the United States and the IMF privately sided with Greece, Germany prevailed, as creditors usually do.
We hope you're enjoying Project Syndicate.
To continue reading, subscribe now.
Get unlimited access to PS premium content, including in-depth commentaries, book reviews, exclusive interviews, On Point, the Big Picture, the PS Archive, and our annual year-ahead magazine.
Already have an account or want to create one to read two commentaries for free? Log in