Insiders: EU should slash Greece’s debt

By Nicholas Vinocur

Transatlantic Caucus finds strong support for relieving Athens' debt burden despite frustration with the Greek government.

As creditors and finance ministers weigh Greece’s latest offer, POLITICO’s Transatlantic Caucus believes Europe should act to relieve Athens’ debt burden despite frustration with Prime Minister Alexis Tsipras, who is seen as largely to blame for the crisis.’
The majority view: While Europe would probably survive without Greece, keeping Athens in the eurozone remains a top priority because a “Grexit” could carry far-reaching consequences for the European project.

And while Tsipras and his left-wing government are seen as bearing the most responsibility for inflaming the crisis, the survey holds other leaders accountable as well. German Chancellor Angela Merkel deserves some blame, as well as the troika of creditors that imposed tough austerity measures in exchange for financial aid and sent Greece into a downward economic spiral.
Those are some of the key lessons to be drawn from the second installment of POLITICO’s Transatlantic Caucus, a group of 120 politicians, policymakers and analysts who represent all sides of the political spectrum within Europe and the United States.
As Europe digests Greece’s last-chance proposals on a reforms-for-cash bailout deal, the focus is squarely on whether creditors can accept Athens’ core demand: easing a €323 billion debt burden to allow the country to get back on its feet.


Germany remains the chief opponent to any restructuring of Greek debt. While Finance Minister Wolfgang Schäuble said Thursday that some easing of the burden was probably necessary, he also said it was illegal under current EU statutes, and offered no way around the obstacle.
POLITICO’s caucus showed greater flexibility on the issue. A clear majority of respondents — 74, versus 44 against — said it was time for Europe to restructure Greece’s debt, and an even greater majority said Athens needed to stay in the eurozone.
“Any union, in order to be sustainable, needs to be crisis resistant,” said one respondent from central Asia. “The current situation with Greece, therefore, is not only a challenge but also an opportunity for the EU if handled well.”


However, support for Greece does not translate into support for Tsipras and his Syriza government. Far more respondents — 51 — blamed him for bringing the Greek crisis to its current fever pitch than the nine who pointed the finger at Merkel. A bigger group of 21 respondents said everyone from the Greek government to EU leaders, the International Monetary Fund and the European Central Bank bore responsibility for the mess, while a smaller group of four said it was all the fault of the “troika”

“Tsipras and the political groups supporting him have deepened it (the crisis) to the extreme and made it harder for eurozone leaders to have forthcoming reactions,” said a respondent from eastern Europe. “If their strategy fails, they will be responsible for it in the history books.”
Another respondent from southern Europe said: “It’s all relative, but Merkel should have taken a different route in 2010,” referring to the beginning of Europe’s sovereign debt crisis in which Germany first first opposed a private-sector haircut for Greece, then the European Central Bank’s policy of unconditional support for the euro.


French President François Hollande has called the latest Greek proposals “serious and credible” and Paris helped to craft the offer. But some senior German lawmakers have already spoken out to express their skepticism about the plan, which they don’t believe Greece will implement.
And Germany could be the key. If the creditors approve, Greece still faces the risk that national parliaments — notably Germany’s — will reject it, raising the prospect of a disorderly Greek exit from the euro zone.
While that isn’t the desired outcome, a large majority of respondents, 78, said that the EU would survive without Greece. “A small storm like that will not affect an ocean liner,” said one Baltic respondent.
Roughly 25 percent of respondents said Grexit would jeopardize the bloc’s future. One pointed to the risk of “political contagion,”or the idea that other European states might get the idea of following in Athens’ footsteps and defying the EU over the terms of their debts.