FT: Keep refugees in exchange for debt haircut

26 January 2016
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Financial Times article, titled “Greek debt is the key to the refugee crisis”, claims to provide a solution to solve two problems: Greek debt and the refugee crisis. The article by Gideon Rachman states that “it is time to think creatively about how these two problems could be linked into a diplomatic package that helps to fix them both. The broad outlines of the deal would be simple. Greece agrees to seal its northern border with EU help, stopping the flow of migrants into northern Europe. In return, Germany agrees to a massive writedown of Greek debt, as well as immediate financial aid to cope with the current crisis. Refugees arriving in Greece are then housed in EU-run camps on Greek islands in the expectation that they will return to Syria (or wherever else they are fleeing) once peace is restored.”

The far-fetched plan states that EU officials are considering “ringfencing” Greece in a plan that has Berlin’s blessings, and then there is the six-week ultimatum given to Greece to handle the refugee crisis or else face a temporary exit from the Schengen Zone. Refugees stranded in hundreds of thousands is a chilling scenario bearing in mind Greece’s debt problem and huge migration.

Now, that German taxpayers find the refugee crisis a more taxing problem than pressuring Greece to pay back interest rates on money owed, German Chancellor Angela Merkel may be able to convince Germans that Greeks would be doing them a great favor by stemming the flow of refugees. Hence, Greece would strike an attractive deal for debt relief.

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