by N. Peter Kramer
Although the ‘starting positions’ of the EU – ECB bailout programmes for Greece were ‘dire’, ‘they managed to preserve the integrity of the euro area, stabilise Greek public finances and strengthen institutions’, but they ‘prioritised fiscal targets over growth-enhancing product market reforms that would have required targeting corporatists interests’. Harsh criticism in a report compiled under the responsibility of former European Commissioner Joaquin Almunia and published last week.
The report commissioned by the European Stability Mechanism (ESM) and titled ‘ Lessons from Financial Assistance to Greece’ points to the mistakes and shortfalls of the support programmes extended to Greece by the EU and the European Central Bank (ECB). The overly ambitious fiscal targets in the programmes undermined the debt-racked country’s economic growth and stopped Greece’s debt burden from growing. They undermined the growth required to significantly reduce the country’s debt to gross domestic product ratio and to put the economy back on the path to recovery.
At the outset, Greece’s creditors ‘failed to fully grasp the root cause of weak ownership, noting that the rationale behind reforms and their long-term benefits were not well explained to Greek stakeholders and citizens, concludes the ESM report.
In the meantime, the main instigators of the European ‘rescue operation’, that still left many Greeks in a deplorable situation, have dropped out of the picture. ECB President Mario Draghi went into retirement. Germany’s finance minister Wolfgang Schauble, the ‘evil genius’ behind the programmes, has been ‘promoted’ by his boss Angela Merkel to speaker of the Bundestag. And his Dutch colleague and accomplice Jeroen Dysselbloem? He disappeared in oblivion.