This week’s deal extending a third bailout to debt-racked Greece in exchange for further austerity measures averted the country’s having to abandon the euro, and the possibly devastating consequences that would have brought. But Vivien Schmidt says it’s a Pyrrhic victory.
Schmidt, Jean Monnet Professor of European Integration and a professor at the Frederick S. Pardee School of Global Studies, agrees with critics who say that far from solving the debt crisis, more austerity will merely prolong Greece’s 1930s-type depression. That depression prevents economic growth and the resources it would bring to pay debts, she says—a problem evident on her last visit two years ago, when “you could see lots of stores closed in Athens.”
Yet several members of the 19-nation Eurozone, having undergone austerity themselves in the past in exchange for help, are loath to spare the Greeks what they had to endure, Schmidt says. “It’s like belonging to a fraternity in which everyone gets hazed. You’re not going to let one young freshman who says I’m going to die…get out of being hazed.”
She also agrees with opponents who say the bargain infringes on Greek sovereignty, stripping the country’s ruling party, the leftist Syriza party, of control over the nation’s economic destiny. The quandary for Greece, she says, is that “if it stays in the Eurozone, it’s subject to a massive loss of sovereignty.…If it doesn’t accept this, it’s in much worse shape if it leaves.”
Schmidt, also a Pardee School professor of international relations and of political science, directs the Center for the Study of Europe. BU Today asked her to weigh in on the Greek debt crisis and whether a third bailout would help.
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