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The seemingly never-ending theatre of the negotiations between the new Greek government and its international creditors – the International Monetary Fund, the European Central Bank and the European Commission – has now entered a more dangerous phase where a mistake on either side could lead to an accident.
The IMF seems ready to throw in the towel. The latest news that the budget for this year threatens to go into a small primary deficit, instead of the sizeable surplus originally planned, adds to the exasperation on the creditors’ side. But as the Greek economy is tanking again, there is also a feeling in Athens that the programme imposed by the creditors is not working, and maybe cannot work.
The current predicament has cemented the narrative that Greece is the victim of a wrong treatment, namely an excess of austerity. However, this narrative overlooks the fact that the approach, which is supposedly the cause of all the problems Greece is facing, worked in other peripheral countries. Portugal, Ireland, Spain and even Cyprus, are all recovering visibly. They no longer need official financing, and unemployment is coming down, albeit slowly and from elevated levels.