The Greek tragedy of being rescued by a flawed system
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THE mismanagement of the euro crisis has its roots in the currency area's flawed political structure. A study of the European Union and International Monetary Fund (IMF) programme imposed on Greece in May 2010 highlights both the nature of the problem and the difficulty in resolving it.
Governments of some member states - particularly Germany - were able to exploit problems in others to support their own interests. The May 2010 programme was the original sin of the euro area crisis. Rather than help Greece, it was designed to protect specific political and financial interests in other member states, above all France and Germany.
By applying its established lending framework, the IMF could have helped contain the crisis and resolve it effectively. However, its role was counterproductive. Using a legitimate concern - the risk of contagion - as a pretext, it underwrote a programme that shifted crisis losses to Greece that other euro members could have borne.
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