Monday’s Eurogroup agreement may not be a cure-for-all Greek ills but it is certainly the best we could have obtained presently.

By Grigoris Nikolopoulos

The write-off of €107 billion of Greek debt and the refinancing scheme ensure that, at least for the time being, we have avoided a disorderly default and remain in the euro. What happens in future now depends on us, and this is naturally worrisome.

To be sure, the current economic policy, which will continue eroding incomes and stoking the recession, will be particularly harsh on everyone this year. But we can, if we wish, secure fast growth in the coming years and turn the game in our favor. It is a matter of our own choice and ability –which I am sure we do not lack.

Many argue that the haircut of Greek debt was not enough. Even our partners recognize that the debt may not be viable, despite the haircut and the structural measures. All these projections, derived from assumptions entered in computer simulation models, are to a large extent reversible. However, they do not take into account developments in the international environment, nor the sudden changes that may affect a shallow economy as the Greek one. They are based on past behaviors and data, and do not take into account that developments may annul the assumptions. In industrial economies with deep roots, such as Germany’s, such sudden changes have a minimal impact.

If we are to avoid default and stay in the euro, the government that will emerge from the coming election will unquestionably have to implement the commitments we have undertaken. And this will not be easy. In the summer, more measures, worth €7 billion, will be needed to meet budget targets, which have already been overshot. It will take a very determined government indeed. The ball, therefore, is again in the court of the political system, particularly of the two major parties that will be called to govern. If they start playing the populist game and fishing for votes again, we are doomed. But if they manage to implement the commitments, we shall gradually see foreign investment flowing in again and Greek money being repatriated. In such a case, the Greek economy can achieve higher growth rates than any other European country, reduce its debt and make it viable.

So we have a clear choice: A very good scenario or a very bad one.