Wall Street Journal
May 17, 2012
The debate raging over Greece's place in the euro zone has obscured an important fact: Many of the most painful steps of the Greek bailout have already been completed.
That has implications for how euro-zone authorities respond to the antibailout backlash in Greece. Why, after two arduous years of negotiations, austerity and halting progress, would the euro zone risk the chaos created by a Greek exit if the government doesn't follow the bailout program as promised?
Consider what has been accomplished. Greece has cut its budget deficit sharply; its budget deficit excluding interest payments isn't far from balance. Euro-zone politicians, defying domestic opposition, have put together two enormous bailouts for the government and engineered an ambitious restructuring of its debt, all to keep Greece from dropping the euro.
The toughest question left is Greece's remaining debt, which will increasingly be held by euro-zone governments. The line from European officialdom is that Greece must repay this debt as foreseen by the bailout program. After all, Greece and its private-sector creditors just spent months negotiating a debt exchange that more than halved the value of their Greek bonds. That wasn't enough?
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