Wednesday, October 20, 2021
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Greece: populism as a problem

Carlos Carnero. Managing Director of the Alternatives Foundation

There is too much literature about Greece, an excessive number of witty phrases pulled easily from their mythology or classic stories, an overwhelming avalanche of philosophical musings about the country and the European Union, when in fact everything is simpler than it seems

The Greek economy had no ability to withstand the shock of the crisis in 2009 because their structures were too weak. There was only one way not to be shipwrecked: that it be thrown a liferaft. It was: community partners, the EU as such, the European Central Bank and the International Monetary Fund lent them a huge amount of money. No one else would have been granted credit at interest rates and such advantageous terms. Obviously, when someone lends out money, they hope to get it back, especially when it does not belong to them, but in turn has gotten from others: the taxpayers. To make a credible commitment to payback, Greece agreed to a series of steps to be able to keep going. Only then the door opened to new loans and, consequently, to a reiteration of their promises.

The same happened with Ireland and Portugal, with one difference: both were true to their word, and nobody in their governments relativised it. Today, both countries are financed on reasonable terms in the debt markets, benefiting from the measures taken by the ECB, as the massive purchase of government bonds of Eurozone states. On another level, Spain ordered a mini-rescue for some of its banks and is strictly honouring the agreement.

Greece has been wasting precious time

So, Greece cannot look towards Brussels, Frankfurt or Washington and point their finger at those who gave them loans as being the culprits for the economic and social situation. No, they cannot and, above all, not because if they in truth want to get out of this situation with guarantees of reforms as necessary.

This is not about assessing whether the policy of austerity for austerity's sake, or the uncompromising austerity applied in recent years has been a success or a failure. In my opinion, it was excessive and bad results bear me out. So much so that even those who defended unreservedly are beginning to have them, and flexibility in the interpretation of the criteria of public deficit that accompanies President Juncker's European Strategic Investment Plan or the before-mentioned buying state debt by the ECB to prove it.

The issue is another: if the Greek government of Mr. Tsipras is ready to fulfil or not the country's obligations and implement the necessary changes. His first steps after being elected were as baffling as wrong: the coalition with the extreme nationalist right, the demand for war reparations to Germany, audits of the same, finding euphemisms, the quick bargaining with the EU.

Finally, Tsipras had to take on board what his predecessors had signed with the Eurogroup, that is to say, the bailout terms, although not admitting it in Athens, obtaining parliamentary approval by stealth and mounting a comedy of errors with which he gained time to not really present a list of measures in line with those signed with European partners.

The result is that Greece, not the European Union, has been wasting precious time and that the country is about to suspend payments if this is not remedied in time.

The Greek government has to decide whether to go ahead with what was signed or not. It is free to do one thing or another, of course in the knowledge of the economic and financial implications and consequences of each of the decisions. The smart thing seems to be to choose the first option, negotiating everything he can. Another thing is if it is honourable to come to power with one programme, having said that it is realistic and feasible, and quite another to recognize that it was neither one nor the other and do the opposite of what was promised in the election campaign.



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