An important shift has occurred in the European Union’s (EU) endless debates over the future of the Euro. Germany and the northern European creditors of the bankrupt Greek economy have been forced by the International Monetary Fund (IMF) to accept that they will have to bear part of the loss and that Greece cannot bear the entire cost of its debt.
For years, it has been an important part of German Chancellor Angela Merkel’s political rhetoric to her domestic audience that Germany will not bail out the criminally improvident Greeks. When Germany asked the IMF to be part of the answer in Europe, Merkel expected the IMF to help Germany impose tough discipline on Greece and the European Commission which did not seem tough enough for the German Chancellor.
Instead, in a long process which led to the important deal last week, the IMF has asked the creditors to write off some of the billions they are owed, in a more balanced approach which moves away from forcing destructive austerity on Greece. As a result, the future of the euro looks a lot more secure.
