I love Greece. Erica and I, sometimes accompanied by assorted kids, have had a number of lovely holidays there. No-one can doubt the fact that at one time Greece was at the very epicentre of the ‘civilised’ world. I still think every day of the oath that Athenian councillors took when they took office, “that I shall leave this city better than I found it”.
We still look at much of art through the prism of Greek literature and sculpture. Ancient Greek and Italian ruins and finds formed the basis of the Renaissance where Northern Europe expanded using the changes in agriculture and the exploitation of South America and Africa to produce surpluses which could be used to create the arts and literature.
That is why I feel desperately sorry for the tragedy in Greece which, in one way or another, is reaching its climax. Let’s be clear there are no easy answers to this and all sides (yes there are more than two) must find a way of accommodating the others because Greece simply cannot function as a developed state whilst carrying the burdens of debt that it faces.
The tragedy has come about because one side lied and distorted and the other side knew that the other side was lying and distorting and ignored it for its own reasons.
The rules for entering the Euro are absolutely clear. Certain levels of debt and sustainability and actions had to be achieved before the country entered the Eurozone and certain things had to happen afterwards. It was clear to many at the time that Greece simply was neither ready to enter nor was it likely to continue to implement the changes required.
In simple terms Greece is a relatively poor country. It employs restrictive practices that would make a mediaeval guild seem liberal. Ever since independence from the junta was achieved politicians have been elected who were not prepared to take the hard decisions which recognised that Greece, like every other Country, is now part of a global economy. This is an economy which Greece, because of its traditional location, could do very well out of. Instead it bought into the idea of international economies but not the practices required to make it work.
A grossly incompetent and inflated bureaucracy; tax paying being an optional extra, especially for the wealthy; byzantine laws; restrictive practices and a habit of ‘buying off’ protest instead of dealing with core issues have laid Greece low and would have laid it low whether or not it had joined the Euro. But joining the Euro cut off its traditional way of dealing with financial imbalance – devaluing their currency. But you cannot devalue a currency for ever because eventually your currency has so little value that there is no point in devaluing it any more. So that’s the Greek side!
The next side is the Eurozone who probably understood and believed all that was in the previous paragraph but chose to look the other way. They can claim, with a little justification, that they were misled by a report and a set of actions created for Greece by one of the world’s foremost set of parasitical bankers. This claim however is only skin deep. The advanced political systems of the existing Eurozone members should have known the deep seated problems in the economy and governance. What were their ambassadors doing a saying; what were their bankers doing and saying? Probably telling the truth but for political reasons in an urge to expand the truth was ignored and the Greeks entered.
But there is another side which includes the UK where because of the false assurance of membership of the Eurozone private and public sector piled in with lending and trade which was not sustainable. They did it because they wanted to believe. That is why the idea of a complete debt write off is impossible and why we cannot just say that we must follow the democratic will of the people of Greece because other countries have a democratic system as well and their leaders have no authority to write off large amounts of tax payers debt without their permission. It’s our Government; our banks; our pensions and investments that would suffer with a complete write off. We should also remember that there already has been a ‘haircut’ of Greek debt with private banks and companies being forced to reduce their debt by a considerable amount 3 years ago.
So what were the current Greek government thinking and doing when a week ago they led their Country up a garden path. Vote against the evil proposals of the rest of the Eurozone they said and when the Country voted to do just that within two days they started offering a deal which was worse than they had rejected. Is the Government naïve or stupid. Did they really think that they could force change on the rest of the Eurozone which includes Countries which 5 years ago were in almost as bad a position as themselves?
In fact they have thrown away a golden opportunity to get Europe as a whole, and not just the Eurozone, behind a workable recovery programme. It seems to me absolutely clear that when they first came to power there was a significant opportunity to negotiate a deal. A Party had come to power which was not associated with the restrictive practices and failures of the past. Yes they had some inflammatory things to say but also some absolute common sense about the impracticality of any country ever paying over a debt overhand of 180% of GDP. But they blew it! Instead of moving in and trying to seek sympathy and friends they came in and tried to dictate the agenda with an incredibly weak hand.
So what could happen now? Well it would help if Germany and the rest of the Eurozone admitted their duplicity in the problem and put forward a substantial debt write off. It has to happen, everyone knows that it has to happen. That would make it easier for Greece to actually deliver changes which are absolutely vital. Greek money, never mind anyone else’s, needs to go back to Greek banks. The economy needs to be got going again, including the 40,000 building workers who were laid off last week because of the Government’s currency controls. A framework of certainty needs to take place against which long term decisions and investments must take place.
Governments like ours and the USA need to stop the Pontius Pilate act and admit their minor complicity in the problem and come up with positive proposals as to how they will contribute to a long-term future settlement.
There is no easy answer to the problems of the Greek economy. Ultimately it must be the Greeks and the Government who provide the actions and policies which will provide a long-term future for the Country. Greece is an important part of the EU, it is a lovely country which deserves better than it has got but deserves little more until it makes the fundamental reforms that will convert from a ‘hand out’ economy to a fully functioning operational one.