The ‘happy ending’ to the Greek economic crisis is making headlines the world over. The historic agreement signed with the EU, through which the EU provides Greece with the necessary funds to avert bankruptcy, marks the rescue of Greece from an unsustainable economic situation. Everyone appears happy that Greece will not exit the Euro zone, which would have marked the first crack in the wall of that zone.
I have been following with interest for the past two years the economic crisis Greece tumbled into. At the time, the EU was busy preparing rescue packages for other EU States which were in trouble: Ireland, Portugal and Spain. The rescue mechanism involved pumping cash into the beleaguered economies and providing them with loans, but the rescue did not come for free. It involved neither grants nor loans without guarantee of payment; this would have been tantamount to spoiling these nations rather than rescuing them. Hence the feasibility studies conducted, and the monetary reform policies required by the creditors; the spending cuts and higher taxes were the bitter medicine the EU imposed before pumping cash or loans into the ailing economies.
When it was Greece’s turn to demand an economic rescue package, it rejected the EU prescription that had been applied to other beleaguered economies. The situation turned into a political tug-of-war between the rightist government and the leftist opposition. The opposition accused the government of giving in to the bitter austerity measures demanded by the EU, claiming that the hefty price would be paid by the Greek common man or woman who was bound to suffer the outcome of inflation, unemployment and economic upheaval. The leftist opposition succeeded in dislodging the rightist regime, and the current Premier, Alexis Tsipras, was voted in. The leftists played on the emotions of the Greeks by promising stability and prosperity with no belt tightening.
Predictably, matters were not that simple. The new Premier was unenviably caught between the worsening economic crisis and the harsher conditions imposed by the EU for a rescue. The Greek case had become so precarious that the EU demanded custody over Greece to resolve its economic deadlock, or that the country should exit the Euro zone. What did Tsipras do? He could not simply go back on his promise of no austerity measures so he resorted to a political gamble to get around the pressures and threats of the EU. He held a public referendum on whether or not Greeks would accept austerity measures, and rallied the public to vote ‘no’. He played on the chords of Greek dignity, and accused the EU of attempting to get Greece to its knees. The result: a more than 60 per cent ‘no’ vote and wide public jubilation which Tsipras counted as a mandate to reject EU dominion over Greece. He had gambled on the incapacity of Europe to let Greece exit the EU and, as the national hero that he had been hailed, he believed he could go back to the negotiation table on his own terms; he could demand a new rescue package that would save face for Greece, or else leave the EU and give up the Euro.
Tsipras’s political triumph was undeniable, but had he figured out what to do if the EU lets him down and holds on to its conditions? Did Greece have the luxury of abandoning the Euro and going back to the Drachma? Obviously, his political bravado did not move the EU. It took 14 hours of negotiations between the finance ministers of EU States and 17 more hours of meetings of heads of EU States for the Greek Premier to get a much worse offer than the one he had recently talked his people into rejecting. Then he had the unenviable task of persuading the Greek parliament to pass legislation and regulations he had previously branded as criminal and terrorist.
Many Greeks are angry with the EU. However, it is their Prime Minister who should be counted responsible for suspending Greece’s economic sovereignty, a result of his political adventuring. He persuaded his countrymen that they did not have to sustain the painful economic measures imposed on them by ‘inhumane’ creditors, but ended up accepting much worse measures. It vividly brings to mind the Arabic proverb that goes to the effect: When water is, after much thought and effort, defined as ‘water’. The saying denotes huge efforts that produce nothing but what is already there.
26 July 2015