It is true that any kind of restructuring might set a precedent that others might attempt to take advantage of.
But it seems clear that the growth and structural reforms that are meant to be the goal of Greek austerity either are not being implemented or are not delivering growth. Although the International Monetary Fund projects Greek GDP will grow by 2.9% in 2015, many disagree. Citi analysts project 1.5% growth for 2105, and 1.7% for 2016 – that’s if a compromise between Greece and the eurosystem is reached by June. Royal Bank of Scotland called the IMF's forecast "simply unrealistic".
A more pragmatic approach, leaving aside the "moral" dimension, would be to acknowledge that the goal of growth is not served by the austerity programme, and to frame any restructuring as an attempt to revive growth through a different route and make Greece a healthy contributor to the euro once again.
Greece’s new prime minister Alexis Tsipras, having toned down his anti-austerity rhetoric before taking the post last Sunday, now looks as if he’s readying himself to make good on previous promises to lighten Greece’s debt burden and end austerity measures. After creating a coalition government with a conservative party Syriza has nothing in common with but its anti-austerity stance, Tsipras has now appointed a vehemently outspoken critic of austerity and eurosystem bailouts to the country’s top economic post.
Austerity has indeed wracked the country, and the Troika should be careful to show sensitivity to Greek voters’ desperation. The problem is the political will to 'help' the Greeks any more is lacking, in part because the rhetoric used has fueled the feeling by voting Europeans that Greece has been fleecing them.
But at least one of Syriza’s pronounced goals with regard to its debt seems highly practicable: including a growth clause in whatever remains of its debt “so that [debt payments are] growth-financed rather than budget-financed,” as the party wrote in its Thessaloniki Programme manifesto.
The proposition seems eminently sensible. Austerity, while rendering many of Greece’s citizens strikingly destitute, has not achieved the intended effects of structural reform – including greater transparency — nor growth. Under current circumstances, rapid growth is unlikely for some years.
The Troika would do well to align its policy on Greece to the goals of modernising the Greek political system and spurring growth. So far, its insistence that Greece take the austerity route to those ends has proved incredibly painful, but not successful. Redoubling that insistence will only serve to further alienate the Greek public, making it all the more likely the Troika won’t get its money back in the end.
Carrying on this way isn’t a strategy for repayment – it’s a stubborn attempt to exact revenge.