At The Guardian, Nobel laureate and former World Bank official Joseph Stiglitz weighs in on the ongoing crisis in the EU, suggesting that the Troika’s true intentions aren’t to help Greece return to solvency, but to teach the country a lesson:
European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics…
In terms of transforming a large primary deficit into a surplus, few countries have accomplished anything like what the Greeks have achieved in the last five years. And, though the cost in terms of human suffering has been extremely high, the Greek government’s recent proposals went a long way toward meeting its creditors’ demands.
We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems. The IMF and the other “official” creditors do not need the money that is being demanded. Under a business-as-usual scenario, the money received would most likely just be lent out again to Greece.
Image: Alexis Tsipras, the prime minister of Greece, greets supporters after a rally of the governing Syriza party. Photograph: Sotiris Barbarousis/Sotiris Barbarousis/epa/Corbis. Via The Guardian.