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Experts: Greek debt problem postponed but not resolved

The Greek debt problem has been delayed again but it has not been resolved, Russian experts polled by TASS said on Tuesday.

The probability of Greece's exit from the eurozone is still high, although this issue has been taken off the agenda for the time being. However, the terms the Greeks have agreed to fulfil can't wrest the Greek economy out of the crisis, according to experts.

The leaders of the eurozone countries reached agreement on Monday on settling the Greek debt crisis. Greece will remain both in the European Union and the euro area and the euro creditors will give Greece an additional 86 billion over three years to help it resolve its current debt problems. Greece has failed to secure even a partial write-off of its enormous sovereign debt equaling 320 billion and agreed to reforms, which stipulate tax hikes, among other things.

There are neither winners nor losers in this deal as both sides have made mutual concessions, Professor of the Higher School of Economics Vladimir Zuyev said.

It is incorrect to talk about Greece as a loser because an agreement on an additional aid program has been reached, he said.

Greek Prime Minister Alexis "Tsipras can't be called a defeated person either: more or less, he has kept his positions and the support of a considerable part of the population," the expert said.

"But the EU's success should be viewed in a broader context rather than as its victory on the Greek front: this is a signal to all debtor countries that a debt write-off is not a scenario they should hope for," Zuyev said.

"This is far more important for the EU," the expert added.

However, Greece's exit from the eurozone could have possibly brought more good than harm to the monetary union in the final account, the expert said.

"This could have led to short-term instability and greater euro volatility but in the final account this would have strengthened the eurozone because a system can get only stronger, if its weak element is removed," the expert said.

The accords reached at the eurozone summit hardly offer a solution to the problem and this is just the beginning of a road and it will be only at the end of it that it will become clear whether the result has been achieved, the expert said.

"Now the Greek financial system will be tested for its strength to show the extent of its endurance to withstand the shock and see whether the population will trust the reforms and whether or not people will withdraw their money from banks," he added.

The Greek debt problem has not been resolved, even if the new aid package is supported by the parliaments of Greece and other European countries, Director of the Department for Strategic Analysis at FBK Igor Nikolayev said.

"Neither Greece not the eurozone has gained from this," the expert said.

"Strategically, it would be better for both sides, if Greece's exit from the eurozone started already at this stage of the debt crisis," he added.

The terms, to which the Greeks have agreed, can't wrest the Greek economy out of the crisis or resolve the debt problem, the expert said.

"Tax hikes are a key measure. There are no miracles: when the economy is in a crisis state, taxes are cut and not hiked. Otherwise, you would drive the economy into a deeper crisis and it wouldn't be able to return the debts," the expert said.

Hardly any prospects can be seen for Greece to service its debt, Nikolayev said.

"A certain period of time will pass and the problem will aggravate again. Both Greece and the creditors have won in the short term but not strategically. This is already the EU's third assistance program for Greece and it gives only a respite and is only delaying the dreadful end," he added.

According to the expert, Greece's exit from the eurozone is 80% inevitable.

"The problem has been delayed once again but it has not been resolved," Director of the Center for International Trade Studies at the Russian Presidential Academy of the National Economy and Public Administration (RANEPA) Alexander Konbel said.

"It is difficult to say whether Greece will be able to bring its expenses in line with its revenues. Each government will try to shift the solution of the problem to the next Cabinet," the expert said.

The probability of Greece's exit from the eurozone is still high, although the issue has been taken off the agenda for the time being, the expert said.

"The issue has been delayed for half a year or a year and everything will depend on whether the fiscal situation in Greece improves," the expert said.

[Source: By Lyudmila Alexandrova, Moscow, 14Jul15]

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