GREECE’S SILVER LINING

GREEK prime minster George Papandreou’s decision to hold a referendum on the bailout deal agreed as part of last week's EU summit outcome was courageous.

He had taken the economic emaciation of his country as far as possible: the threat of political instability, and of it spreading across Europe, is a very real one.

The legitimacy conferred by a referendum is long overdue. The first Greek bailout last year reflected years of fiscal imbalances that certainly preceded their acceptance. The terms and conditions of the bailout were draconian and, quite wrongly, were compressed into far too short a time period. It was never going to be possible to correct the sins of generations in half a decade. The result was predictable. The Greek economy collapsed. The burden of debt proved impossible to service. Greece found itself in an even worse position.