Greece’s proposals for debt repayment are completely reasonable and Germany’s position that the debt should be repaid in full is unrealistic, said New York Times financial columnist Paul Krugman. “What they [Greece] want instead is substantive but not outrageous relief from the burden of running primary surpluses (surpluses ex interest payments), reducing the amount of resources transferred to creditors from 4.5% to 1-1.5% of GDP; they also want flexibility to achieve these surpluses with a mix that includes more revenue and less spending austerity,” Krugman wrote, adding that Greece’s proposed plan is “completely reasonable.” The columnist said that it is agreed by all that the Greek debt cannot be paid in full and what really matters is “how to manage that less-than-full payment.” What he proposed is relaxation on the primary surpluses requirements so that Greece will have breathing room for recovery. “I can’t think of what basis Germany can use to reject this proposal out of hand,” Krugman wrote. “If the German position is that debt must always be paid in full, without any substantial relief, even if it manages to avoid debt write-offs on paper, then that position is basically crazy, and all assertions that Germany understands reality are proved wrong. If the Germans believe that Greece is asking for too much, then a new negotiation will begin.” Hopefully, the columnist wrote, Germany will not threaten Greece that the European Central Bank (ECB) will stop liquidity to Greek banks. “The point for now is that SYRIZA is making sense. The next move is up to the creditors,” the column concluded.
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