Wall Street Journal
March 15, 2012
It's been a good month for Greece and the European Union.
The Greek government, the leaders of the EU, and the International Monetary Fund (IMF) agreed on a landmark economic adjustment program geared toward strengthening Greece's institutional capacity, improving competitiveness, and creating sustainable growth. In addition, an unprecedented "haircut" deal with private-sector lenders clears the way for the release of loans from Europe and the IMF, thus placing Greece well on the path to recovery.
What many Americans may remember most, however, are images of rioting blazing across their television screens. Unseen and underreported is the real story: some of the furthest-reaching and most historic changes to any economy in modern history, aiming not only at fiscal consolidation but also at profound structural reform of an antiquated, overburdened and inefficient bureaucracy that has stifled competitiveness, innovation and productivity for decades. And if Greece's long history is any indication, the country will emerge from this process stronger, healthier and more productive.
In the past two years, Greece achieved the largest fiscal consolidation in the euro zone by implementing the toughest austerity measures ever applied, slashing salaries and pensions by 20%-50% to reduce expenditures, imposing huge tax hikes, and significantly cutting public services and benefits.
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