Others say

Hardly a breakthrough

The leader of Europe’s finance ministers called Wednesday’s agreement on Greek debt a “major breakthrough.” In a way, it was. The latest twist in this perpetual negotiation has raised the art of dithering to impressive new heights.

The next financing crunch, which would otherwise have come this summer, has been staved off: Greece will get money to last it at least until October.

Recently, and in increasingly strident terms, the IMF has called on Europe to commit to additional debt relief. It has argued—correctly—that Greece’s debts aren’t supportable otherwise, even with the maximum feasible effort on the Greek side to achieve budget discipline. The new deal acknowledges this position by stating long-term targets for the debt-financing burden Greece will have to carry. What it fails to do is say how those targets might actually be met.

Germany’s finance minister, Wolfgang Schaeuble, has mainly wanted to avoid decisions on easing Greece’s debt burden any further before its current bailout program ends in 2018, despite the IMF’s advice to the contrary. In addition, finance ministers have been insisting up to now that Greece achieves and maintains a primary budget surplus of 3.5 percent of national income—a target that the IMF calls undesirable and in any case unreachable.

The deal avoids an immediate financial crisis, which is something, no doubt. It doesn’t actually preclude the measures, including further debt relief, that will sooner or later be needed to put the Greek economy back on a stable footing. But it’s a breakthrough with European characteristics—one that settles nothing.

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