A man walks next to a kiosk selling Greek flags in Athens / ReutersAt long last European leaders have agreed to a second bailout for Greece. Don't expect any celebrations, though. The $172 billion agreement, reached in the early hours of Tuesday morning, will reduce Greek debt to around 120.5 percent of the country's GDP by 2020. The modesty of that target -- which might still prove unreachable -- should tell you a lot about how this deal has progressed. In the negotiations, Greece's massive structural problems have become even more obvious, and the enduring message from the process is that (a) this bailout is unlikely to be enough to save Greece and (b) now not just the policymakers, but the people they serve, know it's probably doomed.
This dreary consensus has been building for weeks. The way that French and German media talk about Greece's crisis can feel an awful lot like the U.S. media coverage on the war in Afghanistan, and for a similar reason: resolution is so far off that it's not even clear what "success" would look like. In Greece as in Afghanistan, there are profound negative consequences associated with both action and inaction. It's not clear that a good solution exists, but everyone feels compelled to muddle on anyway. There's a suspicion that, at best, all our planning will only delay the inevitable to a more convenient time: don't let Afghanistan collapse until the Taliban are a bit weaker, don't let Greece collapse until the rest of Europe is in recovery and able to absorb it. Even if that's a chance worth taking, it's not one that American troops or European taxpayers are going to be especially excited about.
On Monday night, the Financial Times obtained a copy of a confidential ten-page debt sustainability analysis prepared for eurozone finance ministers. "It warned," related the FT's Peter Spiegel from Brussels, "that two of the new bail-out's main principles might be self-defeating. Forcing austerity on Greece could cause debt levels to rise by severely weakening the economy while its €200bn debt restructuring could prevent Greece from ever returning to the financial markets by scaring off future private investors." And none of this is coming cheaply for the other residents of Europe. Though huge segments of the bailout burden are being borne by private companies, continental taxpayers will also be taking a hit indirectly through the public sector funds going to Greece.
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Even before this report became public, the conversations being aired in the media in crucial eurozone countries such as France and Germany were deeply pessimistic. "The price for saving Greece is too high," declared a headline in Germany's Die Welt on Sunday. The article, by Florian Eder, emphasized that Greece is nearly impossible to fix, and in attempting to do so Europe is likely only to destroy the union. "There's a feeling that the euro crisis has just entered a new phase," wrote Clemens Wergin in his blog for the same paper last Thursday. "For over two years," he explained, "politicians in Europe have tried to hold the shop together," working to keep nationalistic self-interest at bay, to sacrifice for the greater European good. "Now this arrangement has reached its limits."
Europe's mood has not gotten much better with this deal. Eder has a new piece out declaring that "the billions Greece is getting would be better spent [...] on an exit from the euro." Those setting themselves up as Greece's defenders appear to be somewhere between resigned and desperate. "Give Greece a chance!" cries the headline over another opinion piece in German Die Zeit. "Greeks want to keep the euro," the author argues, and Greece "is willing to give up substantial sovereignty rights" to do it. The last sentence offers a clue, though, as to the extent European unity now appears to be a hypothetical rather than categorical imperative. The message seems to be, "We should support the Greeks--as long as they want it."
But perhaps most revealing is a long plea signed by a large "group of European artists and intellectuals" in today's Libération, a French paper. "The goal cannot be the 'saving' of Greece: on this point, all the economists worthy of this name are agreed," they write. "It's about buying time to save the creditors while leading the country to a deferred bankruptcy." The group argues against race-tinged arguments blaming Greeks for their own situation, and desperately urges for Europe to keep the Greek perspective in mind.
What we're witnessing right now in the European media is an attitude of defeatism. It's exactly the kind of reaction, in fact, that greets newly announced plans for Afghanistan in the U.S., where it's public knowledge that the jig is up, and that we're only sticking it out until we can leave with slightly less of a disaster. If cutting Greece loose is indeed European policymakers' plan -- to use the bailout to buy time, betting on Greece's exit being less painful in a few years than it would be now -- then there's an obvious takeaway from the Afghanistan analogy. Though the current path may be the only sane one, don't expect the voters to thank you for taking it.
Altruism, even when indirectly serves one's own interests as with Europe's bailout here, is a game of patience, and voters' patience tends to wear thin pretty quickly. The numbers that decide Greece's fate may not, in the end, be the ones pushed out by financial analysts. If Greece is to be abandoned on the rocks, the pollsters may be the first to know.
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