A
great deal of ink and broadcast time has been spent over the last few months on
the fate of Greece. Mind you, this is a discussion that self-obsessed Greeks
have been having at least since Homer, but it seems to have gained traction
recently. As a very smart, very well plugged-in Greek friend explained at
dinner last night, “A lot of people in Greece love nothing better than the fact
that Greece is on the front pages of the world’s newspapers. While the content
of this news may escape them they consider such coverage proof that Greece is
where it should be – at the centre of the universe.”
My friend, who would describe
himself as a ‘realist’ rather than a ‘cynic’, says the current stand-off
between Greece and the rest of the Eurozone is ‘pure theatre – nothing more.’
Both sides, he says, are playing to domestic audiences. The Greek side uses its
bizarre, confrontational negotiating style to please the home audience. Given
the high approval ratings of this strategy seems to be working. The optics of
the ‘little guy’ standing up to the
power of the ‘big bullies’ effectively obscures the reality that the country is
broke and can barely meet its pension obligations. The heavyweights of the
European Union, for their part, need to show their own domestic audiences that
they are not giving in to the ‘profligate and corrupt’ Greeks. They are well
aware of the rising chorus of resistance to further financial assistance. “Hans
will not give one penny more to those shiftless bums. If Portugal and Ireland
worked their way out of the recession why can’t Greece?” So goes the rhetoric.
The reality is a bit more complex.
My friend anticipates a messy continuation of the current situation. “The
creditors and the Eurozone are well aware that there is no way the current Greek
government, or indeed any foreseeable Greek government, will make the necessary
structural reforms to generate growth and help the country stand on its own
feet. Rigid, antiquated ideology combined with deeply entrenched vested
interests make such reforms virtually impossible. It’s not just Syriza, the
former New Democracy government was never serious about implementing reforms. It
is far more likely that the creditors will keep Greece on a life-support system
by drip feeding it just enough cash to keep it within the Euro zone. Then they
can forget about Greece and move on to more pressing issues. No one wants to
risk a complete break- up of the Euro over a possible Greek exit from the
single currency.”
The only flaw in this argument is
that the so-called ‘Hard Left’ faction in Syriza doesn’t want to play this
game. They would like to drop the constraints of the Euro and return to the
national currency, the drachma. The
language they use while spinning around in their own little galaxy is full of
such stirring phrases as ‘national
sovereignty, dignity, national honour, and freedom from oppression.’ When
reminded that even fellow ‘austerity’
sufferers like Portugal, the Baltic states and Ireland, urge Greece to follow
through on reforms this faction in Greece says this is merely proof that Europe
is not ‘ready’ for a real left-wing
government. You have to remember that Greece is about the only country left
where political terms like ‘Left’ and ‘Right’
are actually used in serious conversation. Most other countries have moved on
to more current challenges rather than re-fight old, stale political doctrine.
Behind the ringing calls for ‘national sovereignty’ with a return to
the drachma lies a far more mundane
reality. Returning to the drachma
means essentially a return to the rotten old system that broke Greece in the
first place. The government could simply print as much money as it wanted,
regardless of its value, and reward its friends with jobs, higher state
hand-outs, even more restrictive labour practices, and protective barriers for
favoured industries – those that are left in Greece that is. The economic
hardships faced by ordinary people would be glossed over as ‘sacrifices necessary for the common good.’
In other words, ‘Stop whinging about the lack
of food on the shelves and glory in the return of Greek pride.’
Remaining in the Euro, with all its
financial constraints and empty Greek treasury, makes this type of political
spending more difficult. But not impossible. “Remember all those €70 billion in
non-performing loans held by Greek banks. Do you think it is a straightforward process
determining whose loans will be forgiven and whose repayment will be demanded,”
my friend asked rhetorically. “I dare say there will be some interesting
discussions between the banks and the government on this issue.”
He may be right in his ‘life support’ analysis, but there is
always the risk that an accident between inexperienced Greek negotiators and
tired, frustrated Eurozone finance officials could push the country into the
cold, hard world outside the Euro.
