Greece’s tragedy is made at home

Financial Times
Editorial
September 20, 2011

Until now, Athens and its eurozone partners have been like bickering passengers on the same sinking boat. Grudging co-operation has been sustained by fear that if Greece runs out of money, it will drag the rest of Europe down with it. But an opportunity has emerged to detach the responsibilities of the Greeks from those of the eurozone as a whole. It should be grasped.

Athens will run out of cash in early October if the next tranche of the eurozone-International Monetary Fund rescue loan is not disbursed. But no payments are due on Greek sovereign bonds until December. Domestic banks will no doubt roll over the small amounts of short-term treasury bills maturing in coming months. The victims of Athens’ empty coffers will be not bond markets but Greek public sector employees or benefit claimants. Responsibility for them rests with their own government only.

The troika can credibly threaten to withhold aid for three months. Unless Athens makes good on its promises, that is what it should do. If the Greek state stops paying salaries and pensions, that is a tragedy – but one of Athens’ own making, which others should not take it upon themselves to prevent. Not just because they can afford to – Greek middle class penury will not trigger a financial market meltdown – but because it could finally force the Greek political class to face the truth.

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