Amputation?

Attitudes in the EU are hardening towards Greece. Here’s the problem:

Greece already enjoys the longest debt maturities and among the lowest interest costs as a proportion of gross domestic product of any eurozone government, thanks to past bailouts. Some further easing of repayment terms is possible, but governments aren’t prepared to be generous to Greek taxpayers …

The thing is, the EU has been just as hard (if not harder) on other faltering members. And some of those members are seeing success from their austerity plans. In particular, Spain (the 4th largest economy in the EU) seems to have turned a corner.

… It is Spain rather than Germany that may prove Mr. Tsipras’s most implacable opponent. Madrid is clear that any deal with the Greek leader must be based on reform commitments at least as tough as those demanded of former Prime Minister Antonis Samaras. Anything less would represent a win for Mr. Tsipras and fuel support for Spain’s own new radical leftist party, Podemos.

The Spanish government believes that the turnaround in its own economy—growth is expected to reach close to 3% next year and unemployment fell by 400,000 in 2014—is proof that a robust pro-market reform program is the only way to exit the crisis. Madrid believes that it would be in Spain’s and the eurozone’s best interests to allow Greece to crash out of the eurozone …

Would the EU amputate a toxic Greek limb to keep its main body well? It seems like we may find out.

Read about it in “Why the Eurozone May Need to Sacrifice Greece to Save Spain” in the January 28 issue of The Wall Street Journal.