A Pyrrhic Deal: How Greece’s Creditors Won A Battle But May Have Lost The War

The third Greek bailout is not a solution to either Greece or its creditors. Dan Steinbock explains how the talks led to an unsustainable deal that is likely to ensure subdued growth, debt and unemployment in Greece, and the eclipse of austerity politics in Europe.

On August 11, the Greek government and its creditors agreed on a memorandum of understanding (MoU) on a third bailout. The 29-page document, which was leaked to media a day later, is predicated on broad and deep reforms and a timetable. It seeks to restore “fiscal sustainability,” protect “financial stability,” foster “growth, competitiveness and investment” and support “modern state and public administration.”

Pro-austerity advocates consider the MoU ambitious; cynics see it as aspirational. If the deal is...