Greek debt

It will soon be five years since debt-ridden Greece plunged Europe's Economic and Monetary Union (EMU) into a deep crisis. Since then, 240 billion euros ($315 billion) in emergency loans from the International Monetary Fund (IMF) and the EU have flowed to Athens. In addition, private creditors were forced to write off loans amounting to 107 billion euros.

But these huge sums provided only moderate relief. Today Athens carries a debt burden of around 320 billion euros. This corresponds to nearly 180 percent of Greek GDP. The country's debt ratio is much higher than before the crisis began. Its primary surplus of 1.5 billion euros - a budget surplus before interest payments are accounted for - is like a drop in the ocean.

"In Greece, we still have the highest unemployment in Europe. We have an economy that has been in reverse gear since 2008. We're supposed to make all interest payments and service our debt with this tiny primary surplus. That will not work," economist and fund manager Max Otte said.

Another haircut?

Joachim Scheide, a research economist at the Kiel Institute for the World Economy, also assumes that Greece will be unable to come down from its mountain of debt when the aid program ends. He calls for another debt haircut, this time involving much larger amounts: "We need to be thinking of a figure of around 50 percent, and not just 10 or 20 percent."

This haircut would have to be accompanied by sound fiscal policy and economic restructuring. But it would be the first real relief for the Greeks. "Then they could focus on other projects that promote more growth - and that might actually be a new start," Scheide said.

But this seems an unlikely prospect. "There's a fear that other countries would also have the same idea," Scheide said. The lesson would be that large amounts of accumulated debt do not need to be repaid.

Otte has another explanation why the debt cannot simply be written off. "The debt makes up the balance sheets of banks and large financial institutions. They will of course defend themselves, and politicians do not seem to have enough power to push through something like this."

After all, the eurozone promised investors in early 2012 that the haircut would be a one-off. And now more than half of Greek government bonds are in the hands of governments. A haircut without the active participation of the euro member states and the European Central Bank would therefore make little sense.

Because donor countries' governments fear voters will accuse them of throwing good money after bad, a third aid package would have no chance on its own.

"They have embarked on a different strategy that doesn't directly involve taxpayers," Scheide said. This means cutting interest rates and extending existing loans. Experts are describing this as a hidden form of debt relief.

But this strategy has already been applied several times, leaving essentially no more scope for further rate cuts. The average repayment term is already 32 years.

This means hardly any politician currently in office will be around to experience the repayment crisis when the debt comes due - but in theory this can also be postponed indefinitely.

"Such are the political realities that the next time there is a need for assistance, we will do everything possible to find a 'solution' that prolongs the current state," Otte said.

Scheide put it less diplomatically: "The moment of truth will be put off till tomorrow."