Wednesday, April 8, 2015

Stalemate can be replaced with sanity in eurozone dealings with Greece

by Reza Moghadam

Financial Times

April 8, 2015

There is a growing sense of fatalism about Greece. Negotiations with the eurozone are not working. Indeed in their current form they are dangerous, prone to triggering a recession, bank run or accidental exit from the euro. A new approach is needed before time runs out.

Discussions on the long-overdue tranche of eurozone funding continue to follow a timeless pattern. An urgent meeting of the euro group of eurozone finance ministers is called. It cannot reach agreement so a follow-up meeting of eurozone deputy finance ministers is convened; or a convocation of the European Commission, European Central Bank and International Monetary Fund — the bailout-monitoring institutions previously known as the troika. When this, too, fails to yield results it is agreed that there will be a request for a list of actions. However the list requires elaboration and agreement in a subsequent euro group meeting. So the process starts again.

Both sides have wasted time and politicised the situation. The leftwing Syriza government has been generous in providing advice on the architectural shortcomings of the eurozone and mishandling of the Greek crisis. But it has failed to take actions commensurate with the country’s existential crisis. The eurozone, for its part, has been insufficiently mindful of the government’s electoral mandate, its inexperience and more generally of the institutional shortcomings of the Greek system.

Europe is demanding implementation, in the next few weeks, of a long and comprehensive list of actions that previous governments were unable to deliver in the space of a few years.


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