Germany appears to have blinked. Well sort of. Well, not really. But maybe.
For over a year it’s been a game of chicken. On the one side, Greece has been arguing that debt relief is the only way to bring productivity and growth back to the country.
The United States, the International Monetary Fund and others have gotten into the discussion, arguing that there’s no way possible for Greece to pay back hundreds of millions of euros in bailout funds that it owes its creditors.
While on the other side you have an intransigent Germany, led by an angry, grumpy finance minister named Wolfgang Schäuble who has refused to acknowledge or even budge on any such discussions.
Until now, that is.
The mere fact that a meeting took place amongst Europe’s finance ministers to discuss debt relief for Greece is a huge breakthrough. In political terms, that massive, considering that prior to this meeting, Germany refused to even discuss the topic. Period.
Italy’s finance minister Pier Carlo Padoan called Monday’s meeting “an important step” and Jeroen Dijsselbloem, Dutch finance minister and chair of the Eurogroup said “Today was about opening the debate, exploring options and giving political guidance to the technical people.”
Although nothing specific has been discussed, the group agreed to discuss the topic again before May 24th— the date Greece is due to receive its next chunk of $98 billion in bailout money to keep it functioning.
Plans on the table, according to a report published by The Wall Street Journal, include extending due dates on loan payments for 37 years and capping interest rates to 2 per cent.
A debt haircut isn’t an option, according to the report.
In laymen’s terms— this means that Greece’s prime minister Alexis Tsipras, and the current leaders of Europe, including Ms. Angela Merkel, Messrs. Schäuble, Dijsselbloem and others, won’t have to worry about the problem. Instead, the burden will be placed on their grandchildren.
It doesn’t sound convincing to me that the problem is being solved, but rather it’s swept under the rug— until the 2050s— yet another instance of the incompetence and lack of vision amongst Europe’s failed leadership to address a problem face on.