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Press review Greek bailout part of a bigger EU poker game

A temporary reprieve for the crumbling Greek economy as the Eurozone approves a third bailout package


Swiss newspapers have portrayed the €86 billion (CHF89.5 billion) bailout package for Greece as a compromise between pro-austerity Germany and pro-growth France. They warn that this difference in approach could impact more than just Greece. 

The 17-hour negotiations between eurozone leaders resulted in the announcement of a third bailout package for Greece on Monday, narrowly avoiding a “Grexit” for now. But Greece will have to pay dearly to stay in the eurozone by becoming a sort of “economic protectorate” of other eurozone countries and the International Monetary Fund (IMF). 

“Greece’s main problems is not lack of laws but their implementation,” stated Tages-Anzeiger in reference to the demand by Greece’s creditors for passing new laws on pensions and Value Added Tax reforms by Wednesday. 

The German-language daily pointed out that even though the reforms demanded as part of the bailout make sense, they will not help if Greece is not sincere in implementing them. 

“A framework for a prosperous economy cannot be prescribed from the outside.”  

However, according to French-language paper Le Temps, Greek Prime Minister Alexis Tsipras did not walk away empty handed from the deal. Despite practically handing over the Greek economy to its creditors, he managed to negotiate a bailout and an investment plan of €35 billion to boost growth and employment. 

“This is what the Greek prime minister had demanded in vain before launching his referendum [held on July 5],” the paper noted. 

A tale of two Europes

“The compromise is first and foremost one between two different ideas of Europe and its single currency,” stated Le Temps

The paper referred to Germany’s insistence on sticking to the rules to ensure fiscal discipline and France’s defence of greater flexibility in implementing reforms and a belief that boosting growth can help Greece out of the crisis. 

The Tages-Anzeiger wrote that “doves” like France and Italy had managed to save Greece from “hawks” like Germany and that the bailout was proof that Germany did not always get its way. 

However, the paper also stated that hardly anyone believes that Greece will recover while it remains in the euro and is forced to repay its extensive debts. 

“The true purpose of the agreement is to mainly gain more time to prepare for an orderly exit of Greece from the EU.” 

The Neue Zürcher Zeitung (NZZ) wrote that the bailout raises questions about the claim that the European Union is a community of common laws and regulations. 

“It must be clarified how binding the rules that apply to the eurozone are and whether a country can ignore them permanently and with impunity.” 

Cracks in the wall

The Greek bailout negotiations exposed divisions in Europe that could undermine the stability of the EU itself if not addressed, the NZZ added. 

“The longer that reforms in the single currency are delayed, the deeper the divisions between different factions of the euro group will become.” 

The newspaper noted that differences over the bailout were not always over economic questions. 

“In politics, emotions and questions of identity are now even more important than pure cost-benefit calculations.” 

The tug-of-war over Greece has only helped bring these cultural differences to the forefront. 

“After five years of broken promises and dithering distrust is too great among Greece’s partners [especially Germany and Nordic countries], the cultural differences too irreconcilable,” said the Tribune de Genève paper. 

The French-language newspaper also warned that “in this extraordinary game of poker that has preoccupied Europe’s energies for five years, Greece may just be a pretext for a much bigger battle.” 

For Germany, it could mean a failure of the European ideal, for which it does not wish to assume responsibility, while for countries like France and Italy it could mean being subjected to greater economic scrutiny by Brussels.

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