Greece trades fiscal sovereignty for bailout cash

Massive protests across the country were not enough to stop Europe’s latest bailout of Greece, which came loaded with painful austerity measures and strict conditions. Early Tuesday, following 13 hours of debate, eurozone finance ministers, the European Central Bank and the International Monetary Fund agreed to a deal worth approximately $171 billion. In return, Greece has committed to reducing its debt to about 120.5 percent of its gross domestic product by 2020 (it stands at 160 per cent now). This means more cuts, more fiscal reforms and, tacitly, simply less economic and political autonomy.

The good news is a default and the risk of Greece leaving the EU have been averted for now. However, reports as this one by Reuters already speak of “deep pessimism” amongst economists regarding Greece’s ability to turn around for the better. And, as Maclean’s most recent editorial points out, the country’s democracy stands at its weakest point in history: Lucas Papademos, the country’s technocratic and unelected prime minister is completely disconnected from Greeks on the street. It is telling that most media reports about the bailout today fail to quote Papademos’s reaction to the deal, underlining instead what European officials had to say about it.

It remains to be seen whether such a strained political situation can survive long enough to put the bailout to good use.

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