It is abundantly clear to all involved that Greece will never be able to pay off its debt, no matter how much the country increases taxes and austerity. There is, however, a problem: This fact is politically inconvenient to the German government, whose chancellor, Angela Merkel, would like to be reelected in September. Giving the Greeks a break on their debt offends the abstemious average German, and could imperil Merkel’s surprisingly narrow polling lead. Unfortunately for Merkel, the International Monetary Fund is critical to her efforts to keep the costs to Hans Q. Publik down, and it is annoyingly insisting that it can’t be part of a bailout if there’s no actual light at the end of the tunnel, which light can only be provided by debt relief.
The answer was obvious: Let’s table this whole thing until Sept. 25, after which Merkel won’t have to face the voters until 2021, if ever, since by then she’d have been chancellor for 16 years and potentially ready to make it someone else’s problem.
At Monday’s talks in Brussels, postponement of a debt deal proved the only way to bridge stubborn differences between the IMF and Germany. “It would solve everybody’s problem,” said one official involved in the talks. “Except for Greece’s.”
Oh, right, Greece, the country these talks are technically actually about. Funny thing, though: Having made politically damaging move after politically damaging move to satisfy his Teutonic overlords and win the sort-of promised debt relief, Greek Prime Minister Alexis Tsipras isn’t terribly interested in waiting for someone else’s political expediency.
Now Athens is being offered only a fresh bailout loan from Europe to cover this summer’s debt repayments. No debt relief, no QE, no economic boost, and no political victory for Mr. Tsipras to point to….
Greek Finance Minister Euclid Tsakalotos has previously voiced fear that Greece will get “crushed between two elephants,” referring to Germany and the IMF. Although some other eurozone countries, including France, were more willing to help Athens, none was able to shift the two heavyweights.