Onwards Greece stumbles, after its parliament passed the laws demanded by the rest of the Eurozone to unlock a third, €86bn (£60bn) bailout late last night. The full-on impending implosion of last week has been averted for now, but the question of the debt relief necessary to unburden the stricken Greek economy still looms large.
The German parliament still needs to approve the new bailout talks this week (not the actual package itself – they’ll have to vote on that too), although that’s pretty much assured. Meanwhile, Greece’s banks desperately need more liquidity from the European Central Bank - again it now looks likely they’ll get it in the coming days and finally be able to reopen after two weeks of crippling capital controls.
But the issue of making Greece’s debt mountain somewhat more sustainable is still yet to be properly addressed. The IMF dismantled the supposed unity of the Greek creditors on Tuesday night with an unexpected, searing report arguing for extensive debt relief.
That’s something the German government has consistently argued against. It claims debt relief violates Eurozone treaties, but bureaucrats and lawyers can surely find a way around that. Really, Chancellor Angela Merkel needs to find a way to sell it to her sceptical voters (given that she still seems to be motivated by winning another decade in power as opposed to a legacy of a united, prosperous Europe).
Her hawkish finance minister Wolfgang Schaeuble is still parroting his controversial view that Greece would better off with a temporary break from the Eurozone (something his boss doesn’t want). Nonetheless, even he admitted today Greece needs a debt write-down.
However Germany comes to terms with the inevitable, it certainly won’t be resolved straight away. There are now four fun weeks of bailout talks to look forward to. Nonetheless, Greece has to get some form of relief, even though it probably won’t get enough to get it off the bailout bandwagon towards some semblance of economic normality. Grexit may end up being the only viable option.
Meanwhile, Greek prime minister Alexis Tsipras’ position is looking increasingly precarious, after 38 of his own MPs refused to back the new laws last night. And with more political instability will only come more economic upheaval.