Greece and its creditors say they’ve made progress in their endless negotiations over the country’s debts — enough to avoid a default on payments worth more than 7 billion euros in July. That’s good, but it was the easy part. The definitive settlement that Greece and the European Union both need still isn’t in sight.
For the past seven years, the International Monetary Fund and euro-zone institutions have supported Athens with loans in exchange for fiscal austerity and structural economic reform. This strategy has failed to break Greece’s vicious circle of a shrinking economy and higher debt. Europe needs to bring this spiral to an end without further delay — by putting Greece’s debts on a credibly downward path.