No reason to celebrate

The news from Athens that the government has reached agreement with creditors on a third bailout seems positive at first. But there's really no cause for celebration. The new deal, the "memorandum of understanding," is actually evidence of failure.

That a third bailout package of at least 86 billion euros over the next three years is even necessary only shows that the first two bailouts and a debt haircut amounting to a total of 330 billion euros over the past five years did not help the situation in Greece. The methods used by the Eurogroup and the International Monetary Fund to solve the Greek problem have never had the desired effect. Now, the same medicine has been prescribed for the third time. Will it work?

The measures and restrictions for the Greek state and taxpayers that have been agreed on are extensive. They are the sum of many reforms over the past five years that have been attempted merely halfheartedly, or not at all. Why should we now feel confident that true reforms and a new business model for Greece will emerge over the next three years, given the even worse fiscal situation?

The goal is for Greece to be able to finance its state debt on the international capital markets itself in three years' time. The goal is not the nominal reduction of debt, but rather modest economic growth in order to lower the debt in relation to GDP.

Creditors throw principles overboard

The third bailout is also evidence of failure because it is missing a decisive component. The issue of debt sustainability, which is supposed to be checked by the European Stability Mechanism before funds are released, has been excluded. Only come fall will the Eurogroup consider whether Greece will ever be able to achieve a sustainable relationship between debt and economic performance. That's why the IMF initially declined to participate in the third bailout deal. Thus there is already division among the ranks of the creditors.

It is conceivable that the loans for Greece will have to be stretched out in perpetuity. In principle, this is debt relief, just under a different name. The original plan of the first two bailouts - to see Greece one day reduce its debt on its own steam - has also failed.

Despite the money, Tsipras is finished

The left-right-radical coalition under Prime Minister Alexis Tsipras has failed spectacularly. He came to power promising to never accept another bailout, to keep the troika out of the country, and to spare the Greek people more austerity measures. Now he's done the exact opposite. It was only five weeks ago that Greeks voted against the course of action that has now been agreed. The governing Syriza party is split. New elections are forthcoming. How the necessary reforms can be implemented in this constellation is anyone's guess.

In the face of imminent bankruptcy, Tsipras pushed for the negotiations on the third bailout to be completed quickly. Eyeing a possible exit from the eurozone, he recognized much too late that, without the common currency, Greece risked falling into the abyss. Under absolute duress, he agreed to the transfer of national property to the creditors. He accepted practically anything in order to quickly get access to money. One could almost suspect that he made empty promises in exchange for a loan. In any case, it's doubtful that he will keep his promises.

More than anything, the prime minister wants to remain in power and will do whatever it takes to ensure this happens. He cannot be trusted. That's why further checks and securities have been built into the third bailout package.

Whether they are effective remains to be seen. By the autumn of 2014, it appeared that Greece had survived the worst. After the change in government and the unbelievably irresponsible tactical games played by the Tsipras government in the first half of 2015, Greece has once again slid into recession and its banks are out of cash. That's the unsettling balance.

It's highly unlikely that things can be turned around with this third bailout package, especially given that neither the Greek people nor the government truly accept the conditions of the deal. What the government has done is buy time. But if that time is not used to make the third bailout a success, then there is no alternative to Greece exiting the eurozone.

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