I didn’t have to be Delphic to predict that the Greek crisis wasn’t over when an €86 billion third bailout deal was provisionally agreed in July 2015, with the aim of preventing forced exit from the euro: ‘Impossible to see how it could be “over” without the debt relief [Greece] asked for but the Germans adamantly refused,’ I wrote. Of course that wasn’t how Brussels presented the deal: ‘On this basis, Greece… will irreversibly remain a member of the euro,’ declared Jean-Claude Juncker — without, presumably, having consulted any oracles himself. Further trouble was inevitable, because the trajectory of Greek debt is unsustainable even if the most optimistic projections come true, and because the IMF declined to commit to the 2015 settlement unless its sees further cuts in Greek pensions and willingness on the EU side to discuss sufficient debt relief to make ultimate recovery possible.
As ever, deadlines loom: without a release of bailout money, €8 billion of debt due in July cannot be repaid. With elections coming up in France, Germany and Holland, the EU political establishment is terrified a continuing Greek fiasco will boost right-wing Eurosceptic candidates. And the Trump team — whose chosen man in Brussels, Ted Malloch, sees collapse of the euro as a desirable outcome — now call the shots as the IMF’s biggest funder. Those of us who believed the euro might fracture in the first Greek crisis of 2010 were surprised by the strength of political willpower that held it together; but that’s still the way the tide of history is flowing.
This is an extract from Martin Vander Weyer’s Any Other Business, which appears in this week’s Spectator