My Big Fat Greek Bailout
It’s Not Over ‘Til It’s Over

The Greek parliament is voting today on the bailout conditions reluctantly accepted by Greek Prime Minister Alexis Tsipras earlier in the week. The vote is expected to pass even as a contentious new report by the IMF leaked to the press. In the starkest terms yet, the report states that without an extended debt holiday the bailout would be destined fail, and that the IMF would not be able to participate if European creditors did not immediately address this fact. It suggested that Greece should not have to pay a single interest or principal payment on the entire stock of European debt until 2053, a time horizon that far exceeds anything European countries, most notably Germany, are reportedly ready to countenance.

The push for Greek debt relief has the belated backing of the Obama Administration, which has seemed to snap into action in recent days in an attempt to stave off disaster in Europe. U.S. Treasury Secretary Jacob Lew is in Brussels today meeting with European finance ministers, urging them to consider further measures. It’s good that the U.S. is exerting pressure behind the scenes, even at this late date. As Walter Russell Mead wrote in an essay a few weeks back, Washington should not have been this passive for this long:

As for Washington, the Obama administration has spent most of its time and dissipated its political and intellectual energy chasing unicorns—remember the reset with Russia, the once-ballyhooed G-20 forum, and the ‘transition to democracy’ in Egypt?—at a time when the European Union, the foundation of America’s alliance system and our greatest single partner for trade and investment, was sinking into crisis. The United States has been AWOL as the EU lost its way. The Obama administration failed to understand just how important Europe is to the United States, and it has never appreciated how important the United States is to Europe.

An intellectually engaged, politically committed Washington might have been able to help the Europeans out of their impasse; that has in many ways been the American role in Europe since the 1920s Dawes and Young Plans. When we commit and engage, things often go well in Europe. When we walk away and close our eyes, they rarely do. This would not have involved wars, drones, troops or huge foreign aid plans. It’s the kind of international project that Democrats could have sold to the base. It would have only required the kind of ‘smart diplomacy’ that the Obama team claimed it was bringing to the table. But unicorn-chasing is more glamorous than attending to the foundations of liberal world order. Washington has criticized everyone and helped no one in the euro crisis; not since the 1930s has America been this absent when its vital interests were this critically engaged.

But will this last-ditch effort by the U.S. be enough? German Finance Minister Wolfgang Schäuble seemed to admit that he would have preferred to see Greece leave the eurozone rather than have the deal signed. “There are many people, also in the German federal government, that are pretty well convinced that [a Greek euro exit] would be a much better solution for Greece and the Greek people,” Schäuble said. “But it’s something that only [the Greeks] can do themselves.” The German parliament will vote on the deal on Friday, if the Greek parliament passes its agreed-upon reforms today.

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