On Saturday, ratings agency Fitch assessed Greek government bonds to be little better than junk status, conferring a ‘CCC’ grade on the paper, down from ‘B’. The downgrade reflects continued worries that the government of Prime Minister Alexis Tsipras will insist on departing fully from the road to recovery as laid down by the so-called ‘troika’ of the European Central Bank, the European Union and the International Monetary Fund as conditions for combined bailouts valued at €240 billion (Dh959.48 billion).
Since being elected in January, the Athens government has tried desperately to unburden itself of at least some if not all of the punishing austerity measures demanded by the financial regulators. Tsipras has introduced legislation to improve social payments, free electricity and other benefits to the hardest hit after a decade of Greek recession. Combined with this, Tsipras has scored cheap political points in Greece by demanding Germany pay punitive reparations as a result of its Second World War invasion. The demand has sparked a war of words with German Chancellor Angela Merkel, who accused Tsipras and his socialist ministers of throwing red herrings at the real question — Greece’s inability and unwillingness to make ends meet.
The reality is this: Tsipras needs to let go of reparations. They’re not going to happen — nor should they 70 years after the end of the war. But Merkel must ease off too. There is a solution — reschedule Greek debt over a longer term.
