In the past six years, Greece has become a laboratory for the production of an elixir that will cure the ills of the Greek and European systems, both from an economic and political perspective. This role was accepted by all the governments that have come and gone and by the people because of the terrible management of the country for the past 35 years.
The interesting thing is that the involvement of our creditors in a bid to rescue the Greek economy has revealed since last June a major difference of approach between the International Monetary Fund and the eurozone with regard to the sustainability of the Greek debt.
The IMF proposal to extend the grace period through 2040 and to set the interest rate at 1.5 percent for 30 or 40 years, sound like a fairy-tale scenario to Prime Minister Alexis Tsipras and the coalition government. Berlin, of course, reacted just as was expected.
Some international analysts point to the possibility of a major clash between Washington and Berlin aimed at reducing Germany’s influence as policymaker and its hold over the rest of Europe. There have been several interesting incidents to back this belief.
This writer admits a complete inability to assess such assertions. What is certain, however, is that beyond whatever domestic interests may come into play in light of the German elections in 2017, whatever agreement is reached on the issue of the Greek debt will serve as a model in the management of similar problems that will inevitably emerge with other overindebted eurozone countries.
Tsipras rise to power in January 2015 set a precedent for this kind of approach, in the political arena, at least. The idea of a radical left-wing government ruling a eurozone member-state was regarded as a complete nightmare at the time and the reaction of the European establishment was indeed brutal. However, the leftist Greek prime minister showed an impressive amount of adaptability and the European system gained some valuable experience, giving it a blueprint for dealing with the possible rise of an anti-euro left-wing party in another country of the beleaguered eurozone.
The cost of this experiment is being paid for by the people of Greece, but the European establishment has certainly become wiser. It is now in a position to deal with similar problems if they emerge in Spain, Portugal or elsewhere. As an experiment, Greece has played its role by transforming an extreme government into a systemic partner within Europe. The experiment for surmounting the differences between the IMF and Berlin over the Greek debt is something quite different and all we can hope is that it doesn’t all blow up in our faces.