Monday, November 28, 2011

Europe's Missing Vision for Greece

by Nicos E. Devletoglou

Real Clear Markets

November 28, 2011

Europe and the international financial markets are two years deep into Greece's sovereign debt crisis. Yet critical questions not only stubbornly persist, but indeed transcend everything that has been said and done by European leaders. Late last month in Brussels those leaders presented their "grand rescue plan" for Greece. They continue to act as if just applying more and more of what they have been prescribing will alleviate the crisis. It will not. In fact, it will only make things worse. Why?

Today the EU, ECB and IMF - the so-called "troika" - require Greece to approve their new debt deal, which pushes private creditors to accept voluntarily a 50 percent loss on their Greek bonds in return for a fresh €180 billion bail-out package. This will be complemented with an injection of €106 billion in capitalization of weakened banks presumably coming from an emergency fund of the European Financial Stability Facility apparently due to expand to €1 trillion from €440 billion.

Indeed, the coalition government of Greek Prime Minister ad interim Lucas Papademos was installed on November 11 precisely to underpin that program by implementing even harsher austerity measures. In December the troika will disburse the still pending €8 billion tranche for Greece to meet current obligations and sanction another €70 billion pay-out in February.


1 comment:

kleingut said...

Greek politicians, media, academia and opinion leaders should be ashamed for more or less ignoring (and hiding from the public) that this Task Force has been at work for nearly 3 months. It has published its 1st Report recently. The Task Force had been established by the EU so that its resources can be used by Greek authorities to meet 3 great challenges facing the country and Greek society:

1. Supporting growth, employment and competitiveness.
2. Enabling growth through reform of Greek public administration.
3. Maintaining progress towards fiscal consolidation.

The Task Force’s 1st Report outlines a multitude of initiatives which have been started already. Reviewing them, one can come to the conclusion that the noble goal which the Task Force sets out for itself in the Executive Summary can realistically be achieved, namely:

The Task Force is a resource at the disposal of the Greek authorities as they seek to build a modern and prosperous Greece: a Greece characterised by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos.

I am certain that the vast majority of Greeks would love to hear that there is hope for a Greece characterized by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos. I am even certain that the majority of Greeks would enthusiastically support such a project and contribute to it where they can.

How should the Greek public find out about this project when neither politicians, media, academia nor opinion leaders discuss it intensively?

Let’s assume for a moment the worst-case-scenario happens in Greece: complete collapse of the economic, financial and political systems. The return to a standard of living of decades ago and mass emigration above all of the younger generation would be consequences.

If that happened, how would the present Greek generation justify to the younger one that they did have the opportunity to avoid that but they didn’t take advantage of it?