Troika Deal Drives Greece Back Toward Austerity

“The rightwing orthodoxy that dominates thinking in Brussels has asserted itself over the hapless Greeks,” writes economics correspondent Phillip Inman at The Guardian.

“A deal that allows the eurozone policymakers, the International Monetary Fund and the government of Athens to keep talking next week is the first stage in a clampdown on anti-austerity sentiment,” Inman continues:

Greece has many enemies inside the eurozone. The countries that have suffered Brussels-inspired austerity – Portugal and Ireland – and those that have played a role in enforcing it – the Germans, Dutch and Finns – all want the radical leftwing Syriza-led government in Athens to stick with the programme. France and Italy might have been courted by the Greeks and proved reliable allies, but they stand meekly on the sidelines offering warm words and little else.

For the right-of-centre parties that control Portugal, Ireland and probably more importantly Spain, which is also under serious threat from an anti-austerity party, the need to keep Greece in check is driven by domestic politics. Any sense that austerity was ever wrong or that it delayed the recovery, as Greek finance minister Yanis Varoufakis argues, would undermine their authority and hand the intellectual higher ground to rival parties.

So Varoufakis’s first demand for a debt writedown was dismissed. Then his attempt to win a bridging loan, separate from the existing bailout deal, was trashed. Decisions to suspend privatisations were frowned on. Now he must use what money is available to shore up Greek banks.

“Where have we heard before that banks must come first?” Inman asks.

Read the details of who got what in the Greece-Troika deal in an article by Raoul Ruparel, head of Economic Research for Open Europe, here.

— Posted by Alexander Reed Kelly.