Debt relief for Greece is necessary to avoid a crisis in the Eurozone

On 25 January Greece will hold parliamentary elections. The elections have generated uncertainty in the Eurozone given the potential for the radical left party Syriza, which has called for a renegotiation of the country’s bailout conditions, to emerge as the largest party. Paul De Grauwe writes that even if Syriza fails to win power in the upcoming elections, the debt problem in Greece will ultimately require a balance to be found between the interests of creditors and debtors. Unless the political leaders of the Eurozone accept some form of debt relief for the country (and for other countries in the Eurozone periphery) a crisis will be inevitable in the long run.