Friday, January 16, 2015

Argentina’s Lessons for Greece

by Pierpaolo Barbieri & Dimitris Valatsas

New York Times

January 16, 2015

The last time Greeks faced a general election, two and a half years ago, the eurozone faced an existential crisis. There were rumors of bank runs in Athens, of pre-emptive Iberian exits from the monetary union, even of Germans unilaterally calling it quits. Greeks are now returning to the polls on Jan. 25 to face choices similar to those in 2012.

One beleaguered option is to “stay the course” of their international bailout arrangements and the harsh adjustments they impose. This is the position argued by Prime Minister Antonis Samaras. The alternative is “anything else” — a cacophonous policy mix proposed by the main opposition party, Syriza. Depending on whom you ask, this includes a unilateral moratorium on foreign debt and the rollback of the structural reforms that have helped restore international competitiveness and fiscal sustainability.

Yet something crucial that has been ignored by most media has changed since 2012. These elections are not about how to manage the economic debacle, but rather about how to steer an incipient recovery. The Greek economy has been growing since the first quarter of last year, according to Eurostat. In the third quarter, the country’s growth was higher than that of any other eurozone member, including Germany. This is not just a rebound: Unemployment has been declining and now stands roughly where it was before the worst point of the crisis two years ago. All this suggests that reforms are belatedly but surely yielding results.

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