ML-Implode News - Be Bold, Frau Merkel

Critics contend that this is ancient history, but it isn't. That tragic decision and subsequent mistakes have transformed the political economy of the eurozone. Initially a voluntary union of equal member states, it has become a hierarchical relationship in which eurozone institutions have become instruments for creditors to impose their will on debtors. The bailout of Greece's private creditors has also set Europeans against each other: Germans, Spaniards, Slovaks, and others now have an interest in resisting the debt relief that Greece needs to recover. To find an amicable solution to the Greek crisis, the eurozone needs to escape from this destructive logic.
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The starting point is to be honest with voters. Merkel and others need to explain that Greece cannot pay its debts in full. So the choice is not whether Greece's debts are written down, but how. They could be restructured in an orderly fashion in which creditors get some of their money back. Or they will be defaulted on in a chaotic fashion in which some creditors may get nothing back. If that forced Greece out of the eurozone, the country would also default on its Target2 liabilities to the European Central Bank (ECB). The total bill: 350 billion euros or more.

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Be Bold, Frau Merkel | Foreign Policy