Greek Voters Won the Battle but Lost the War (I24News, 15 July 2015)

So Greece has secured its third multi-billion Euro bailout in five years (this time, it should get 86 billion Euros over three years). But the conditions imposed on Alexis Tsipras, the Greek prime minister, by his country’s creditors will have to be approved by the Greek parliament before July 15. Mr. Tsipras ended up agreeing to everything he once swore to oppose. The risk of being expelled from the euro and of becoming a failed state seems to have taken over his mind. The cost of a “Grexit” undoubtedly was the focus of European leaders as well: a Greek default would have cost European governments and the European Central Bank 340 billion euros (over 3% of the eurozone’s GDP), i.e. far more than what it cost them to keep Greece afloat.
Mr. Tsipras has agreed to harsher conditions than the ones against which he successfully campaigned in January 2015. As for the July 5th referendum, it rejected a more lenient deal than the one imposed on Greece this week. Under the new and harsher deal Greece will have to raise the retirement age, put an end to professional privileges, privatize its electricity market, and liberalize its trading rules, its labor market, and its banking system – all this under the leadership of a diehard Marxist.
In effect, Greece is now under the economic trusteeship of the European Commission (EC), of the European Central Bank (ECB), and of the International Monetary Fund (the so-called “Troika”). Unlike the nuclear deal with Iran, the financial deal with Greece will grant access, without prior notice, to suspicious “sites:” the “Troika” will closely monitor the Greek government’s policy, which will have to include the repealing of any legislation passed under Mr. Tsipras’ government that violates the conditions of previous bailout agreements; the “de-politicization” of Greece’s civil service; the reform of its judicial system; and the deposit of what is left of the country’s assets into an independent fund as collateral.
The result of the Greek referendum proved meaningless because Greece is bankrupt (its debt amounts to 180% of its GDP). Popular will should be honored, but so should debts. Greek voters are entitled to express their opinion, but so are the European taxpayers who have been asked, time and again, to bailout an overspending and untrustworthy government. Mr. Tsipras bowed to the “Troika” after realizing that he had a choice between honoring his electoral commitments and having his country expelled from the euro. His government may not last: a rebellion is already brewing within his far-left Syriza party, and his parliamentary majority is fizzling. He will probably have to form a different coalition or call a snap election. Then again, the “Troika” might just impose a government of technocrats to implement the reforms which Greece is no longer allowed to push off.
The deal with Greece is not a done thing yet, as it must be approved by the Bundestag and other European parliaments. If concluded, the deal will probably and hopefully signal the end of Greece’s fiscal irresponsibility, economic cronyism, and voodoo accounting. This in itself will constitute an achievement and might salvage the euro. Eventually, however, eurozone governments will have to address the contradiction between monetary union and fiscal autonomy. If it takes a Greek tragedy and bailouts worth billions to enforce rules that were agreed upon two decades ago, the time might have come to set up a common fiscal government for eurozone members.

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