Nobel laureate economist, Paul Krugman, says nominal debt relief for Greece and an end to austerity policies is essential; but he admits it is practically impossible accurately to predict the risks of a return to a national currency.

In a television interview with Athens’s SKAI TV, Krugman concludes that the six-month negotiation that the Tsipras administration conducted with Greece’s creditors was flawed, as it did not have an alternative solution to the country’s fiscal knot; he believes the Greek Prime Minister ought to have gone ahead with introducing a parallel currency or even a return to the drachma.

While stressing the significance of nominal debt relief and reverting the austerity policies that were implemented during the economic crisis, Krugman underplays the importance to the economy of the planned reforms of state structures and markets.

The US economist considers the third bailout package doomed because it is “designed to fail” and wonders what the difference is between Tsipras and his left-wing SYRIZA party on the one hand, and  and their predecessors on the other, as regards their dealings with Greece’s creditors.

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