Any lingering doubts that Greece will fail to implement the reforms agreed under its third bail-out package can be put to rest after the country’s latest general election. That means it’s time for Greece’s creditors to talk about debt relief — and the greater challenges facing them are no excuse for a delay.
When Alexis Tsipras hailed Syriza’s election victory over the weekend as a “clear mandate” for his party, even commentators fond of attaching a populist label to the newly crowned prime minister could not dismiss his words as rhetoric.
But Sunday’s result also made clear that the population of Greece want to stay in the euro — and is willing to take the pain of further reforms. That the Greek people do not want to leave is obvious from the performance of the Syriza splinter group Popular Unity, whose voting against the government a few weeks ago drove Tsipras to call a snap election. The party — which supported a return to the drachma — failed to win a single seat.
The election result will have been welcomed in the corridors of European power — at a time when the size of the refugee crisis facing the continent is leaving little room for cheer.
But reforming Greece’s economy is only one side of the euro. With a fresh democratic mandate behind him, Tsipras is fully entitled to demand talks on alleviating his country’s crippling debt burden.
Whether this takes the form of maturity extensions, exchanging nominal bonds for GDP linked instruments or some other form is for the leaders of Greece and its creditors to decide. But decide they must — and soon.
While the internal problems of the eurozone drained much political capital — and goodwill — over the course of this year, a far more devastating humanitarian crisis was brewing on Europe’s borders. Only over the last few weeks has the scale of this suffering received the attention it has long deserved.
The Greek problem has also gone on for too long. Only when there is a proper, workable solution to its debt catastrophe can the eurozone truly move on and become the fully functioning union its creators envisaged.
The eurozone has become more closely integrated over the years of crisis — the creation of the European Stability Mechanism is just one example of that. But this year’s re-ignition of fears of a Greek exit — precipitating a disintegration of the eurozone as a whole — created nothing from a market standpoint except turbulence. That must not be allowed to happen again.
But more importantly, Greece’s own problems cannot linger while that country is acting as one of the first safe havens for thousands of people fleeing for their lives.
Greece needs a solution. This time, it’s not just the eurozone that’s at risk.