Greece: Europe must face facts and forgive some of Greece's debt

Greece and its creditors are wrestling with the country's debts yet again. It probably won't be the last time. As long as they keep making the same mistake, the next agreement is no more likely to succeed than the others.

Back in 2010, Greece was given one of the biggest bailout programs in history. It got new lending in return for fiscal austerity, but its debts weren't reduced: Creditors were spared any write-offs. Experts objected that the program put too big a burden on Greek taxpayers, that this was neither politically nor economically sustainable, and that creditors should be made to take losses.

They were right then, and they still are.

There's been some limited bailing in of creditors since then, an extension of maturities and lowered interest rates, but the basic pattern hasn't changed. As a result, Greece's debt keeps rising. It now stands at roughly 180 percent of gross domestic product. This is plainly unsustainable.

The new fix under discussion, according to a recent Bloomberg News report, would extend Greek loan maturities further, to 50 years from 30, and lower the interest rate paid by 0.5 percentage point. Another bailout loan, adding 15 billion euros, also looks likely. All this might keep the show on the road and allow the so-called troika representing Greece's creditors -- the European Commission, the European Central Bank and the IMF -- to say that the country can meet its debt target of 124 percent of GDP by 2020. Of course, after every previous negotiation, they also said that Greece was on track.

Read more: ekathimerini.com | Europe must face facts and forgive some of Greece's debt

France: Anything's possible now in Europe - by Serge Halimi

Everything was becoming impossible. It was impossible to increase taxes because that would discourage “entrepreneurs”. It was impossible to protect a country against commercial dumping by low wage countries, as that would contravene free trade agreements. It was impossible to impose even the tiniest tax on financial transactions; most states would need to support it in advance. It was impossible to reduce VAT, as Brussels would have to agree to that.

On 16 March, everything changed. Those orthodox institutions, the European Central Bank (ECB), the International Monetary Fund, the Eurogroup and the German government led by Angela Merkel forced the reluctant Cyprus authorities to take a step which, had it been taken by Hugo Chávez, would have been deemed dictatorial, tyrannical, a blow to liberty, and would have prompted angry editorials.

The step? Automatic withdrawals from bank deposits. The rate of confiscation, initially set at 6.75% to 9.90%, was almost a thousand times as much as the Tobin tax that has been a hot topic for 15 years.

So in Europe, where there’s a will there’s a way. Provided of course that the right target is chosen: not shareholders, not creditors, but the holders of deposit accounts in debt-ridden banks. It is so much easier to rob a pensioner in Cyprus (on the pretext that the real target is a Russian mobster hiding in a tax haven) than it is to extract money from a German banker or a Greek armaments manufacturer or a multinational with dividends tucked away in Ireland, Switzerland or Luxembourg.

Angela Merkel, the IMF and the ECB are forever talking about the imperative need to restore creditors’ “confidence” and the impossibility of increasing public expenditure or renegotiating sovereign debts: the financial markets would come down on any deviation. But how much confidence is it possible to have in the single currency and the sacrosanct guarantee of bank deposits when customers of a European bank can wake up to find that part of their savings has disappeared overnight?

Note EU-Digest: the playing field in Europe has tipped in favor of a dishonest financial industry and accommodating governments, with the taxpayer footing the bill.  A major overhaul is required  urgently. European politicians also better start serving the people who voted for them rather than private sector lobby groups who have taken over Bruxelles.

Read more: Anything's possible now - Le Monde diplomatique - English edition