Austerity Squeezes Greece Too Hard

Morris Segall     

The Greek paliament’s approval of a $113 billion austerity package — demanded by the EU and IMF as a condition for receiving a $17 billion installment of the $160 billion bailout package negotiated last year — will allow the country to avoid defaulting on debt obligations due in July and August. But does the Greek experience call into question the soundness of the EU austerity policy? While the objective of the measures was to reduce government deficits below 3% of GDP, they have left more than 800,000 Greeks jobless while the Greek economy has continued to contract. The EU needs to consider adopting a longer time period for debt reduction. Greece also needs to crack down on tax evasion and collect more revenues. Squeezing the Greek population and economy further could well lead to a political backlash which, in turn, could threaten the existence of not only the current Greek government but the EU. Read more in Morris Segall’s op-ed, published July 1 in The Baltimore Sun: http://www.baltimoresun.com/news/opinion/oped/bs-ed-greece-20110630,0,6665125.story