Friday, October 12, 2012

Where is Europe going wrong on Greece?

After five years in recession and a massively shrinking economy, protests, social arrest, massive wage cuts, social benefits cuts, tax increase and massive unemployment, Greece is nowhere near the end of the tunnel.

With all the billions that the EU and the IMF are pouring into the country, surely we should have had some results by now. Why isn't this austerity plan working, apart in the imagination of Europe's ruling elites?

Is it only Greece's fault, or has Europe got it wrong altogether? Europe's leaders talk about the necessary growth needed to kick-start Greece's and Europe's economy, but until now it has remained only on papers.

Great plans have been announced but we have seen no actions for their implementation so far. "Greece must stick to the plan," many European officials and politicians state. But the only thing they are asking is never ending austerity policies. The Greek public obviously can not take it anymore.

They bring as example Bulgaria and other Eastern European countries, that had to go through such measures in the past. But most of them are still suffering from the effects of austerity. Salaries are still low in Bulgaria and recession still harms the economies of Hungary and Romania. 

Greece is forced to take massive loans, that will have to repay with great interest. It is undeniable that Greece had a corrupt governing elite that brought the country to its knees. But European officials did not do anything about it, before the Greek and the European economy reached a crisis. 

They knew about the state of the Greek and other European economies since the introduction of the euro. Also it is not just Greece that has accumulated huge debt, something that the capitalist system requires. In fact all European nations are heavily indebted.

Instead of investing in the Greek economy and save it by stimulating growth, they are forcing more debt on the Greek people. An increasing number of bail-outs mean more debt that Greece will never be able to repay and of course more austerity and lowering of the living standards of the Greeks.

The country needs growth and investments not more debt, especially when this debt is to save the German and French shares in our banking system. In that way, money of German and other rich European citizens go to the hands of the German and other European bankers', through Greece in the form of a bail out. Yet it is the Greeks that must repay these loans.

We need Greek companies to be allowed to flourish and develop with EU funds, cooperation and partnership of other companies from all over Europe. Instead of that European and other multinational companies come and buy everything at low cost, leaving very little profits for Greece and its people. This is a mass privatization and sell out of every national asset, while there is no plan to make Greece a more competitive economy.

If Greece was to become more competitive, our taxation system should be the first to be reformed and ease the restrictions when starting up a business. Instead of that taxation was raised and a large number of the Greek SMEs was forced to close. None of the reforms were growth, small business or people oriented, rather they clearly favor the big multinational companies and the banks.

Many European politicians stated that since political pressure for reforms in Greece failed, Europe needed the pressure of the Markets to push for reforms in the country. They claimed that if Europe allowed such development investments in Greece now, nothing would change, no structural reforms would take place. There would be more spending and thus we would be in a similar situation a few years down.

I agree that Greece needed reforms badly and it was about time for some of them to happen. But not in a way that the living standards of the Greek EU citizens became similar to those of a developing country. Nor turning the Greek public opinion against the EU and the European project, allowing nationalism and far right parties to enter the political scene of the country.This destabilizes the whole social coherence of Greece and it is dangerous. Similar events took place in Germany during the '30s.

The reforms should have started since we entered the EU, but they did not. The blame should fall equally on the Greek political elite and of course the European. Because every country forgets the reforming agenda after it joins. Instead they focus only on how to spend (or waste) EU funds in the case of smaller, poorer countries, or how to increase their influence and power in the case of the bigger and richer countries.

Besides, if there was any real pressure for reforms on the states by any EU body, the same rule could apply for the bigger richer nations and they wouldn't like that. Imagine Britain, France or Germany approving the EU to interfere with their internal affairs. If they do not want to be subject of closer EU inspection, then the smaller states avoid it too.

But this has as result the very slow implementation of EU law and policies on national level. Of course we can not forget the fact that even the rich EU countries are not always playing by the rules. Germany bended the euro-zone rules for its own interests and national policies in 2003.


All these harsh rules for Greece while belonging in the euro-zone with prices equal of those in Germany, France, Holland and other richer EU nations. The country has reached a point that its citizens have Polish salaries, Swedish taxes and German prices. How do this add up and how can anyone live under these conditions?

If Germany or any other European nation wanted to tell the Greeks what to do and how to do it, then they should have bothered to try to understand how everyday life is in Greece, what difficulties do the ordinary Greeks have to face on a daily basis, the country's economy, culture and way of thinking.

There are plenty of historical and political reasons why there is so much corruption and political idleness in the Greek state. The funny thing is that these reasons are actually partly due to decades of European involvement and meddling in Greece's internal affairs.

But today's dominant northern European/Anglo-Saxon realpolitik attitude in politics doesn't help in all the above. Easier said than done, when it is not the Germans that must go through 40-50% cuts of their salaries. It is the Greeks and other citizens of the "peripheral" nations that must step in and save the euro, while they are not the ones who benefited the most from it.

I understand the "much needed reforms" argument, but you can not turn all countries into Germany overnight. Besides that would mean becoming as industrial as Germany is and there is no plans for that. So where is all this austerity leading? If they gave us a clue, perhaps we would not protesting as much. Especially when in every crisis in Europe either political, ideological or economic, Greece was one of the countries that sacrificed the most.

All European nations must have equal rights and opportunities on prosperity and development. If they guarantee us that after the austerity period, Greece will become a true European economy then I am sure that the Greeks will reason, grin and bare the austerity. But the problem is that the European powers want a two tier continent, comprised by the core rich and the peripheral poor regions.

Then the problem is clearly one of inequality, national chauvinism and arrogance of the North/Western EU states. Until the rich European powers lose their colonial and imperial complexes Europe won't be fair or equal and that is the real root of the problem. 

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