Monday, July 20, 2015

Greece's failure, Europe's shame!

http://uk.businessinsider.com/greece-bank-holiday-2015-6?r=US&IR=T
After 5 years being in the media spotlight for its economic woes, the Greek drama reached finally-or hopefully- its crescendo.

Lat week on early Thursday hours, the Greek Parliament approved the new bitter austerity measures, to ensure a new bail-out package.

The decision naturally caused an outrage among the people of Greece and Europe.

Just days before the Greeks were called to vote in a referendum. Its purpose was to decide if they would accept their country's European partners' demands for further austerity, in exchange for a third bail-out.

However, the European establishment warned-or rather threatened- the Greeks, that the outcome would determine the continuation of the country's euro-zone membership. Initially the referendum was not meant to be about a YES or NO to euro membership; the Greeks have repeatedly expressed their wish to remain in Europe's single currency.

But Greece's European partners in their desperation to ensure a continuation of it's austerity program, proceeded in totally unacceptable threats. They were undermining Greece's democratic process, purely to protect their financial interests.

With the excuse that the previous governments signed for the previous bailout deals, the Troika and the Eurogroup are demanding the continuation of a program which even the IMF admitted they got wrong.

Greece's debt became unsustainable. The second and third bailouts are needed only to pay off the interests of the first, plus the damage that it did in the country's economy. Instead of a renegotiation, a partial debt relief and a new plan to kick-start an economic recovery, Greece's creditors insist on further austerity and the diminution of the Greek public's living standards.

Austerity does not help reforms in Greece. It impoverishes ordinary Greeks and helps radical parties become established. Greece needs growth stimulus in return for structural reforms. It does not need Europe's money in the form of bailouts, which end up in Greek and thus European banks. 

European investments are needed to create jobs and lift Greek people out of poverty, in combination with structural reforms and modernization of the country's economy.

So why is Europe insisting on such disastrous policy for Greece, is it perhaps because the whole European economy is in tatters? Possibly other euro-zone member states are keen on having a steady flow of cash into their economies, in the form of the interest that the Greeks pay on their loans.

The German economy for example has benefited hugely from the Greek loan repayments and as it is one of Greece's main creditors, it is also one of the main beneficiaries from the whole situation. It is no wonder that Germany's Finance Minister Wolfgang Schaeuble, has adopted such a hard-line position towards Greece, refusing a debt relief.

This is a sign that the EU has lost its original purpose. The Eurogroup, an informal body comprised by all euro-zone member states, is dominated by the "vision" of just one country's minister of finance.

In an interview in the New Statesman magazine, the former Greek Finance Minister explains how Mr Schaeuble controls the decisions taken in the Eurogroup. In addition he describes the utterly disgraceful demeanor of Greece's European partners, towards him and his government.

"It’s not that it didn’t go down well – it’s that there was point blank refusal to engage in economic arguments. Point blank. … You put forward an argument that you’ve really worked on – to make sure it’s logically coherent – and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply. And that’s startling, for somebody who’s used to academic debate. … The other side always engages. Well there was no engagement at all. It was not even annoyance, it was as if one had not spoken".

Not that Mr. Varoufakis himself or Syriza, do not have a fair share of blame; but at least he had the decency of resigning, something that Mr Schaeuble has not yet the backbone to do. Greece and the Syriza government have made huge concessions to their creditors, only to be met with irrational hostility by them, under the excuse of lack or "trust".

In reality, Syriza in in power for just 6 months. The lack of trust the Europeans are insisting on, is deriving from the previous governments that they supported and they still wish to re-establish.

Under such negative climate and scaremongering, the Greek referendum result was of course a NO. Prior the election date, there was a different rally daily.One day Greece's main cities were hosting a demonstration supporting a YES vote, the next supporting NO. Political TV spots became very common, alongside numerous televised political debates.

Never was the country so divided, since the devastating civil war. Businessmen and wealthy individuals openly supported a YES vote. Business is easier within the euro-zone and ensuring Greece's membership was a priority for the country's elites.

On the other hand, public sector employees, lower class and working middle class or pensioners were strongly supporting a NO vote. They are the least flexible and competitive groups, that are opposing change and reforms.

A major role in the defeat of a YES vote was the fact that the Greeks did not wish to return to pro-austerity governments. Many analysts believe that the voters voted NO, because they did not want the former New Democracy leader and Prime Minister, Antonis Samaras to return in power. 

A YES vote could have led to a crumbling of the SYRIZA government and a return of the New Democracy. So the fact that Mr. Samaras made the mistake not to resign as the New Democracy leader, after he lost the general elections in February, may have contributed to the referendum result.

Well that what's happens, when personal egos and ambitions are stronger than democratic legitimacy. European leaders such as Samaras or Schaeuble, do not want to admit defeat or that they made a mistake. Instead they wish to remain in power, while it is obvious that the people do not want them.

With a majority of 61%, the ΝΟ side the Greeks made it clear to Europe that they do not want any more austerity. They also made a point that with threats you do not win and that they have no place in a democracy; as Greece and Europe itself pride themselves of being. 

https://euobserver.com/economic/129165
Despite all this, Europe ignored the result of the referendum and continued its financial strangulation of Greece and the Syriza government. 

They had the ECB turning the cash tap off for the indebted country, thus forcing Syriza to proceed to capital controls for Greece's banks, further damaging its economy. 

People could only withdraw €60 per day from ATMs. Pensioners were particularly hit as most of them do not hold bank cards. 

Cash became scarce within the Greek market. Employees could not be paid and even online orders could not be made with Greek credit cards. Companies were not able placing orders to import goods from abroad. Trade within Greece also became difficult, as nobody had enough cash to purchase necessary quantities. 

The tourism industry was severely hit, as people were afraid to spend and travel. In addition foreign visitors were cancelling their reservations in fear of becoming stranded and without cash, during the Greek tourism high season.

Is that how Europe wants to help Greece and its economy to recover? Could they at least have the decency to admit that their interests are anything but for the interests of the Greek people? European leaders want to punish Syriza or make sure that this leftist government collapses so others won't spring up across Europe. 

Yet they are missing the forest while looking for the tree. Europe and the euro, as well as the fortunes of the people of the continent cannot be hijacked by personal aspirations, ideologies and interests. 

Syriza came in power and it might soon go, but so will Chancellor Merkel or Mr. Schaeuble. Yet their current actions will have an impact on millions of Europeans for decades to come. What will be their legacy in the future generations of Europe?

No comments: