Treasury Secretary Jack Lew said that he hopes the ongoing crisis in Turkey convinces Greece’s creditors to warm to “debt relief.”
Lew made the remarks in an interview with the Financial Times, published Wednesday. On Thursday, he is scheduled to meet in Athens with Greek Prime Minister Alexis Tsipras.
“I would hope [the recent regional upheaval] would change the climate in which discussions of debt relief happen, just because it’s the right thing to do on its own, and at a time when Greece is in a position [of] geopolitical significance that’s a good time to reinforce their fiscal future,” Lew said.
European Union member states, led by Germany, host banks that are owed over $100 billion by the Greek government. They have been staunchly resistant to acquiescing to write-downs, despite deep economic contraction in Greece. Unemployment in Greece hasn’t fallen below 10 percent since last decade. It is currently higher than 20 percent.
Creditors’ recalcitrance has come, despite renewed opposition last summer from the US government and the International Monetary Fund, which believe that write-downs will help Greece’s economy improve in the long-run.
Lew’s lobbying effort will be paired with a push to get Tsipras’ left-wing government to more deeply embrace creditor-friendly austerity. Lew is expected to exhort Tsipras “to press ahead with economic reforms,” FT noted.
The initiatives include “labor, pension and social security reforms, tax hikes and privatizations,” as the Associated Press remarked.
Yanis Varoufakis, a former Finance Minister under Tsipras, recently likened the austerity-bailout dynamic between Greece and Europe as “Ponzi austerity.” Greece has been dependent on emergency financial aid since 2010. The need for assistance has been driven, in part, by cuts implemented by Athens.
“Once these bubbles burst, the only way you can continue to pretend that you’re solvent is through even more debt, that will be utilized in order to repay or to pretend to repay the previous debts,” Varoufakis said on “Democracy Now.”
In July 2015, Varoufakis resigned from Tsipras’ government, after the Prime Minister went ahead with continued European bailouts in exchange for austerity reforms. Tspiras pressed forward with continuing the arrangement, despite Greek voters rejecting the outcome 61-39, in a national referendum.
“The fact of the matter is that the Greek government last summer, in July of 2015, surrendered to the creditors,” Varoufakis said.
The aftermath of the coup attempt in Turkey on Friday immediately spilled over Greece’s borders. Eight Turkish soldiers sought refuge in Greece, amid the seizure attempt, claiming they had nothing to do with it and feared a fair trial in Turkey. The Turkish government has, since Friday, arrested, fired or suspended 50,000
The crisis also rattled European economies. In its immediate aftermath, the Euro lost about 3 percent of its value in US dollars.
