Giving Greece a Chance to Succeed

Abstract

The causes of the Greek crisis have been widely documented now, as well as the profligacy of its political elite along with its preference for closed markets that create rents, which it can then distribute as part of a horse-trading game. A well-documented need to cut waste in the general government and to deregulate the economy, that was initially included in the list of reforms the official creditors asked the Greek government to undertake, was pushed forward only slowly and reluctantly. In the end, even though the number of reforms ultimately implemented and the fiscal measures taken sum up to an unprecedented scale, the way these measures were implemented and their timing implied that whatever was done within the context of a rapidly deteriorating political and economic reality was always “too little, too late.” During this slow process in which markets anticipated reforms, and their growth-enhancing prospects, which never materialized or materialized reluctantly and with great delay, the financial system of the country was put under unprecedented pressure.