Tuesday, February 3, 2015
Give Greece’s Alexis Tsipras time
February 3, 2015
There are two schools of thought about how the euro zone should play its negotiations with Alexis Tsipras, the new Greek prime minister. One is that other leaders and the European Central Bank should back him into a corner. The other is that they should give the radical left Syriza leader time.
The latter is the better option, particularly since Tsipras is already moderating his hard line. Not only would delay minimise the chance that Greece ultimately quits the single currency. It would cut the risk of a financial and political backlash in the rest of the euro zone in the event that Athens does leave.
This is not the same as saying the euro zone should cave in on the substance of what is at stake. While it should give Greece debt relief – especially as Syriza has now abandoned its demand to write down the nominal value of its borrowings by 50 percent – it should only do this if Tsipras commits himself to further reforms.