Opinion: Greece's 'Groundhog Day'

Remember the film "Groundhog Day"? In this 1990s cult classic, an arrogant weatherman finds himself reliving the same day over and over again, with seemingly no way out of the time warp. What does this have to do with Greece's credit? A lot.

The latest loan approved by the Bundestag will not magically lift Greece out of its debt quagmire. It will only reinforce the status quo. The approach may be a little different - this time creditors are attempting to change Greece's policies - but it does not solve the underlying problem. Of the 86 billion euros ($95 billion) Greece will receive, 54 billion euros will go to repaying existing debt to the lenders. This creates new debt in order to pay old debt. And this new debt must also be paid at some point. But with what funds?

Greece' banks will get a further 25 billion euros to save them from bankruptcy. Again. A bit of the cash will flow into the state budget, but in reality this has already been spent. Greece has enough bills to pay, and, as soon as the money arrives, it will be gone. What then?

This third credit package is tied to governmental, economic and social changes in Greece. The country needs an effective fiscal authority, and tax privileges are to be scrapped. The government must clamp down on corruption and the underground economy and create a social safety net. It all sounds very sensible. But will this money be enough to turn a dysfunctional state into a functioning one? Or is much more money needed? How quickly can these changes be made? Certainly not overnight.

Debt overload

What will be the consequences? If things continue as they have, the answer is obvious: A fourth credit package will follow and then a fifth, and so on. And that brings us back to "Groundhog Day." The arrogant weatherman finds a way out of the time warp by making changes. And that's what Greece's creditors have to do. First, they have to realize that they are never going to see their money again as long as they keep replacing old debts with new ones. But they need to admit this and accept the consequences. It won't be enough to simply extend the repayment periods or temporarily put a freeze on debt repayments. These are just tricks aimed at getting the International Monetary Fund back on board. The IMF has called for debt relief - something the European creditors have so far rejected, citing judicial limitations.

The billions shouldn't be used to repay debt, but to finance investments. For this, though, there has to be a plan about how to successively build up the economy. And that includes making it easier for Greece to access European investment subsidies. We are talking about roughly 36 billion euros that cannot be tapped until 2020 because Greece lacks its own capital. How about dropping Greece's contribution to the capital resources to zero?

Germany has plenty of legislators who agree with such a strategy. But they are in the Bundestag minority. And this is why they again voted against the latest credit package: because it only promises to stabilize one thing, and that's the status quo. Maybe they'll be able to get more people on their side when voting on the fourth bailout or the fifth or the sixth. See you soon in the time warp known as "aid for Greece."

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