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Monday, July 13, 2015

Greece and Europe reach a deal after all | Brookings Institution

Greece and Europe reach a deal after all | Brookings Institution

Syriza gambled and lost, causing the Greek economy to plunge back into recession as uncertainty and eventual capital controls strangled the economy. This would potentially be justified if a better ultimate deal resulted, but it is very hard to believe that the Greeks would have failed to do at least this well, with far less pain, if they had played nice instead. The only remaining argument in favor of their strategy is that it is possible that Tsipras had to be this confrontational in order to hold Syriza together while moving towards the concessions to Europe necessary for a deal. Again, it is hard to imagine that there was no better way, if only a toned down version of the tough approach to negotiations, but it is impossible to prove this.
In any event, there now appears to be a deal, which is definitely good news. Let us hope that it holds together through the remaining steps, leads to positive effects on the economy, and can be implemented over three years without any new and risky confrontations. None of these are certainties, but the alternative of Grexit would be so damaging that I, for one, will be celebrating the fact of a deal.

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