The recent deal on the Greek debt provides Athens with a significant breather, pushing away the specter of full and uncontrolled bankruptcy. That?s the good news.
The bad news is that some critics will try to convince us that we should have threatened, or even carried out, an organized default in order to get a better deal. It?s the usual motley alliance of leftists, populists and nationalists who really believe that Greece would be better off by threatening to blow up the global credit system. The same people argue that ?whatever the outcome, the Europeans and the Americans will not let us drown.? The problem of course is that if their theory were to be put into practice, the results could be devastating. It?s like somebody trying to convince you that there is life after death; but to find out if he is right, you have to die first.
In any case, the eurozone deal would never have been agreed on if the Greek Parliament had not passed the ambitious yet painful midterm program. In the world of the markets, there is no such thing as debt relief without painful austerity measures.
Of course the risk is still here. This government, which has repeatedly gone from hyper to hypo, might fall asleep at the wheel, thinking, ?We?re fine for a few years.? A large number of ministers resist every painful decision, whether it?s layoffs in the state sector, the liberalization of closed-shop professions or the privatization of public utilities.
The Germans, and other Western Europeans, have warned in closed meetings that their patience has run out. From now on, they want to see results — and nothing but results. Any delay or machination will be met with a tough response. The deal made clear that the Europeans wish to help Greece, but they would abandon the country to its fate — if we decided to go it alone.
A careful reading of European officials? statements shows that Greece does not get the same treatment as its southern peers. The phrase ?Greece is a special case? was heard at least 10 times from the lips of foreign officials.
As a senior German official told one of his Greek counterparts: ?We are doing all we can to keep you inside the eurozone. If you decide that you can no longer afford to stick with us, we shall respect your decision and, again, make everything we can to facilitate a smooth exit.?