collapses, there will be giant dollops of blame to go round. The biggest ones will stick on whoever behaves most unreasonably in the stand-off between Athens
and its creditors, which could easily end in default and disaster.
This link between the blame game and the game of chicken is one reason to hope the Greek crisis might, even at the 11th hour, have a satisfactory conclusion. Both sides have an incentive to accommodate each other’s reasonable positions; otherwise, they will be lambasted for failing to prevent an avoidable catastrophe.
In calling eurozone leaders to a summit on Monday, Donald Tusk, the European Council president, said last week: “The game of chicken needs to end, and so does the blame game.”
In the worst scenario, if the two sides cannot reach an accommodation, Greece could become a failed state. The rest of Europe
will also suffer a blow.
The recriminations that would then fly would be so bitter that they would inflict a second round of damage. The principal players need to act responsibly over the next few days to avoid the worst of any backlash.
Alexis Tsipras, the Greek prime minister, has the most to lose. If he turns down an honorable compromise, he may be hounded from office.
But the creditors have a huge amount at stake, too. If the eurozone countries are seen to have undermined a democratically elected government by making unreasonable demands, the sense that it is a benign community of nations will be damaged. The International Monetary Fund, the junior creditor, will also be on the firing line for lending its credibility (and money) to a program that spectacularly failed.
As things stand, everybody deserves a share of the blame. Greece cooked the books to get into the euro in the first place. The country was riddled with corruption, inefficiency and tax evasion. It then lived beyond its means, racking up giant fiscal and trade deficits.
After the crisis hit, Athens dragged its heels on deep-seated reforms, unlike other troubled countries in the eurozone such as Portugal
, Cyprus and Spain
, which are now recovering.
Despite all the agony, Greece was beginning to turn the corner early last year. But then the government of Antonis Samaras succumbed to populism.
This, though, was nothing compared with Mr. Tsipras’s wild election promises. Since taking power in January, he and his finance minister, Yanis Varoufakis, then exacerbated the problem by wasting time and making inflammatory comments about the country’s creditors.
The eurozone has a lot to answer for, too. Its cardinal sin was its refusal, at the insistence of the European Central Bank, to let Greece default on its debt at the start of the crisis back in 2010.
At the time, Athens owed money to private creditors, who should have faced a so-called haircut, or reduction in the value of their investments. Instead, the eurozone countries and the I.M.F. lent Greece a huge amount of money, the bulk of which was used to pay off the private creditors.
The result has been to turn what would have been a dispute between Athens and a group of banks and pension funds into a poisonous battle between Europe’s nations. The I.M.F. went along with this, against its better judgment.
The creditors’ second error was to focus too much on fiscal austerity and too little on deep-seated reforms. After its precrisis binge, the Greek economy was bound to shrink, but it didn’t need to lose a quarter of its output.
So much for where the balance of blame lies. Provided everybody gives ground, it is still possible to reach a deal that unlocks cash from the creditors and stops Athens from going bust.
Such an agreement would have two essential elements: Greece would implement a series of reforms, in particular to its unsustainable pension system; and the eurozone would agree to negotiate in good faith on a subsequent deal to cut the country’s debt burden.
Mr. Tsipras would not have to accept any cuts in low-income pensions. But he would have to phase out early retirement programs rapidly and cut supplementary pensions.
Greece would not have to produce a big budget surplus this year. But it would have to immediately implement reforms to tax collection, the public sector and sales tax that would help sustain its finances in the medium term.
The eurozone countries would not have to accept an official haircut in the amount of money they are owed. Instead, Greece would be given a longer grace period before it needed to start repaying the debt and more time to finish the job.
What is more, the eurozone would not agree to such rescheduling now. But it would commit to work hard to complete the job by, say, the end of the year, provided Athens kept its side of the bargain. The eurozone would also promise that the I.M.F. would vet the sustainability of Greece’s debt.
If either side put such a package on the table, the other side would be under huge pressure to agree — because, if it didn’t, it would be rightly criticized, not just by the Greek people but by fair-minded observers elsewhere.