A view of Greece from the Outside - Commentaries and Opinions
Thursday, January 29, 2015
Must Debt Relief be "Deserved"?
As is well know to my readers, I am for a Greek debt
relief but against a haircut. Strictly on the basis of economic – and not
political – grounds. A well-structured debt relief provides the same benefit
for Greece as a haircut (perhaps even more) and it causes less one-time pain
for the creditors. Both sides have to be happy!
SYRIZA has presented the argument that Greece
deserved the same debt forgiveness as Germany in 1953. I argued that 1953 was
not a good example because no one would have had to take a loss on German debt
if, instead of a haircut, there would have been a well-structured debt relief.
And now I read this article by Leonid Bershidsky, a former publisher of Forbes
in Russia, in Bloomberg’s ("Germany deserved debt relief; Greece doesn't!"). Given his background, Bershidsky obviously has some
very strong feelings against anything which comes from the left. But still, his
article is worth reading and there will undoubtedly be many who will consider
it as a reality check for Greece. Here is an excerpt:
“Of course there are political arguments for Greek
debt relief, as there were in the German case 62 years ago. European leaders
are worried that Greece might leave the euro zone and trigger its
disintegration. It might be less costly to write off some of the debt than to
deal with such dire consequences of a tougher stand. Then, however, the problem
should be framed in these stark terms: Greece's creditors would be paying
ransom to its far-left government so it doesn't mess up the common currency,
which Greece had no business adopting in the first place. If that is the case,
we should be spared parallels with the 1953 London conference. It had far
nobler goals, and Germany was much better positioned to put creditors'
generosity to good use than is Syriza's Greece”.