- The Washington Times - Thursday, February 2, 2012

In Europe, every day seems to be Groundhog Day. The Greek economy woke up Thursday morning, saw its shadow and retreated for six more weeks of bailouts. Already two years into the crisis, the Hellenic debt-to-gross-domestic-product ratio remains a crippling 160 percent - despite all the past bailouts.

The latest examination by international debt inspectors found Greece in such dire straits that it requires another $20 billion cash infusion. This would be on top of the $171 billion promised in October, which was on top of the $145 billion Greece received in 2010.

The other major effort to address the situation over the past week was the push to convince private debt holders to accept a nearly 70 percent cut in net present value of the Greek bonds they hold. The deal has to be finalized and announced by the end of this week if it is to be implemented before the next looming deadline. Athens has until March 20 to redeem more than $19 billion worth of bonds.

Unfortunately for Greece, even if private bondholders accept this haircut, it would provide only $132 billion in debt relief. That’s not nearly enough to dig the country out of the debt brought on by decades of overspending, coupled with a stagnant economy.

Greece is in its fifth year of recession, with unemployment now at 18.4 percent. The country’s GDP is expected to shrink 3.7 percent this year. In addition to insolvency, Greece has a competitiveness problem. Some of the measures that are now being discussed - such as abandoning the minimum wage and cutting the two months of bonus salary that government workers receive - would help improve competitiveness while moving closer to fiscal balance. But this is all just fiddling while Athens burns.

Promising such austerity measures in exchange for yet more bailout money is not the path to sustained growth. Greece is not going to escape this repeating cycle of near-collapse and bailout without doing something that sparks sustained economic growth and private-sector job creation. It’s well past time to try something new. The last two years of bailouts and broken promises to cut back on spending have resulted in a shrinking economy and what seem to be daily news of rioting on the streets of Athens. That’s not exactly the best advertisement for Greece’s most significant industry: tourism.

The European Union hopes to use the current crisis to force a closer fiscal union - a plan the United Kingdom has already rejected. The EU has a history of failure when it comes to member countries meeting fiscal targets required as a condition of membership. Recent shocks suggest Greece should seriously consider the option of dropping out of the eurozone and returning to the drachma as a starting point to restoring economic health.

Nita Ghei is a contributing Opinion writer for The Washington Times.

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