Editorial
Greece and its
financial overseers agreed on terms for continued bailout payments on Monday.
The agreement is cause for relief — without it Greece would go bankrupt. But,
at the same time, it is no cause for celebration — indeed, quite the opposite.
Greece must eventually carry out painful reforms. But the precondition for
these reforms is not the austerity demanded by the agreement but economic revival.
Greece
is already in critical condition and Monday’s agreement will only make things
worse. Years of austerity and depression have poisoned Greek politics, idled
more than one in four of its workers (and nearly two in three of its young people)
and torn holes in its social safety net.
These sacrifices have choked off investment and
squandered human resources. Experts say there is little chance that further
sacrifices will revive Greece’s economy or make its debt burden more
sustainable. Yet that is just what the European Commission, European Central
Bank and International Monetary Fund have again insisted on. Greece’s prime
minister, Antonis Samaras, felt he had no choice but to accept. He agreed to
cut public-sector paychecks and eliminate 15,000 Civil Service jobs — not by
attrition, but by dismissing the current jobholders.
Greece’s Civil Service is bloated, patronage-ridden
and inefficient, and it clearly needs reform as part of a broader program of
economic renewal and revival. But throwing thousands more out of work when the
unemployment rate is 27 percent is not a promising path to real reform,
especially when done on the orders of foreign bankers. The last such round of
public-sector cuts, in June, which shut down the state broadcasting system,
badly backfired and nearly shattered Mr. Samaras’s fragile governing coalition.
Monday’s agreement also calls for a staggered payment
schedule that will allow the lenders to suspend bailout payments if Greece has
not met its job-cutting commitments by July 19.
In brief, the more implausible austerity becomes as an
economic remedy, the more unchallengeable it seems to become as a political
mantra. Its most consistent advocate, Chancellor Angela Merkel of Germany, is
up for re-election this September. She is unlikely to change her tune — which
is popular among German taxpayers — before that. Nor is she likely to change it
if she wins another term.
Other lenders like the International Monetary Fund
seem more troubled by evidence that austerity has done real damage to the Greek
economy. But that realization has, so far, brought no change in policy and no
relief to suffering Greeks.
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