Monday, 5 December 2016

Can Greece export stability for debt relief?

Italy's referendum upset, four months after Turkey's coup, puts Greece between two politically unstable or unpredictable countries. The Eurozone's basket case is by comparison a relatively stable factor in the region. Despite their troubles, Greeks have elected to stay in the Eurozone and, however imperfectly, work with Europe. 

German foreign minister Frank Walter Steinmeier committed to improving relations during a visit to Athens today. Barack Obama lauded the Greeks for staying the course of reform and European unification despite the difficulties during a visit on November 15-16. These are points marking a gradual shift in Greece's image and outlook, but does it mean that premier Tsipras can cash in this stability for the debt restructuring he wants? 

There is a partial answer in today's Eurogroup, where the head of the ESM, Klaus Regling, will present some proposals for short-term debt relief for the Greeks, beyond what the May Eurogroup already approved, but short of what the Greeks want. EU finance commissioner Pierre Moscovici also voiced confidence last week in Greece completing the second review of its third bailout loan before the end of the year. European rhetoric towards Greece has alternated between the polemic and the reassuring over the years of Greece's crisis (2010-present), but it has been more consistently reassuring this year, and is becoming increasingly so. 

Perhaps European mainstream political forces, which are pro-Europe, are beginning to understand the damage austerity has done to the European cause. But the Greeks shouldn't overestimate the cash value of standing still. Europeans still expect reforms and efforts at convergence.  

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