Germany and other creditors can, of course, stick to their demand for the current bailout terms or bust, literally. But Greek GDP has fallen by about as much since 2009 as German output fell during World War I. That is not solely the fault of Greece’s corrupt political class or its broken-down public administration. An insistence on more fiscal tightening is economic madness, with potentially disastrous political consequences, in Greece and beyond. Conversely, fiscal breathing room will create an environment more conducive to the kind of reforms Greece so badly needs.
Syriza is a poor standard-bearer for these reforms. But the new government has shown a willingness—from which it must not stray—to suspend or delay the more controversial parts of its agenda. Its only immediate demand is for the fiscal bonds to be loosened, after six years of recession and five of the most unremitting austerity.
The IMF has admitted to a slew of errors in designing the Greek program. The Germans and their allies should do the same, overlooking the tone of many Greek officials’ pronouncements and instead pushing hard on the substance to make sure Syriza doesn’t backslide. Messrs. Tsipras and Varoufakis have as good as admitted that their electoral program isn’t realistic and have offered concessions. Now it’s Germany’s turn.