I am not sure why the promise that the crisis could be quickly solved was made. Was it because the Troika (ECB, EU, IMF) had not realised the depth of the problems facing Greece, the European periphery, and the continent’s banking system? Or was it because they were afraid the people would not be able to stomach the truth? What is certain is that we are now paying the price of this monumental breach of trust.
A monumental breach of trust
There is no better proof that my country is drifting away from the Eurozone than the sharp contrast between the mood that prevailed in Brussels and Athens after the elections that took place on 6 May. While Europe was desperately trying to figure out how to react to the inconclusive result, Athenians were in a state of joyful confusion, like the one people experience on the morning after a revolution. “We‘ve sent Europe a message at last: We can’t take it anymore,” said a friend, echoing the feelings of hundreds of thousands of Greeks. In the days that followed, the feedback that EU correspondents like me got, was that the states and banks of the Eurozone, the Commission, and the ECB have already begun “technical” preparations for what, until recently, was considered unthinkable: The ousting of Greece from the Eurozone. However, my alarming reports, as well as those of my Greek colleagues in Brussels, made no difference. Opinion polls suggest that the Coalition of the Radical Left (SYRIZA), the major anti-bailout party in Greece, has grown stronger since the last election, and that it may even score a stunning victory on 17 June.
In effect, Greece is living in a world different from the rest of the Eurozone. Greeks blame the Adjustment Programme for the fact that the country’s economy is contracting for a fifth year in a row, while unemployment is hitting all-time record highs. More than half of Greek youths have no job, or prospect of finding a job. GDP is projected to contract by 20 percent or more in comparison to pre-crisis levels. They also feel humiliated by insults coming from Berlin and the demeaning comments made in the international press. “To hell with it,” many of my compatriots think, “how much worse could it be, if we return to the drachma?” On the other hand, many Europeans had enough of Greece, and they, too, think “to hell with it. How much worse can it get if we pull the plug?” Both sides are equally tired, if for very different reasons. And both sides are equally wrong.
To hell with the euro?
Because of this, it is vitally important for our leaders to tell the truth, no matter how hard it may be. It may be the only way to restore trust between citizens and governments and salvage the European project, before it is too late. In my humble opinion, the message from Berlin should be that it will take years for reforms to bear fruit and that Germans should be patient. Let us not forget that, during the first decade of this century, Germany transgressed six times on the EU’s 3 percent budget deficit threshold and that, for almost a decade, it was mocked by other EU members as “the sick man of Europe.” So far, Germany has also made a profit from the loans it gave Greece, and all projections have shown that, for the taxpayer, it is far less expensive to help this small country than to let it go down. Besides, if things spiral out of control after a “Grexit,” history will not forgive those who decided to risk the project of European unification. Most importantly, Germany knows full well that national humiliation can backfire, and it ought to remember that, when it found itself in need, its own debt was restructured, its crimes forgiven.
Lessons from history
On the other hand, what should get across to Athens, is that the drachma will not solve any of the problems that bankrupted Greece, namely, mismanagement of public finances, over-reliance on public and private consumption, lack of export-oriented enterprises, low competitiveness, tax evasion, and weak administrative capacities. Moreover, to introduce a new currency while already in default is suicidal.
Obviously, changes to the Memorandum of Understanding can and should be made. First of all, the German government’s approach to give the same medicine that has been prescribed for Greece to everyone else in Europe, even to countries with primary surpluses, is a fixation that is difficult to understand. If the rest of Europe relaxes its austerity policies in order to avoid a double-dip recession, the Greek economy will benefit through increased tourism and stronger exports. More importantly, the conditional disbursement of bailout funds should be tied to meaningful reforms, reforms that will improve the quality of life for the Greek (e.g., less bureaucracy) – and not to fiscal targets only. In addition, a one-year extension of the deadline to bring down the deficit below the 3 percent threshold would give the Greek economy some important breathing space – and that at a very low cost for the Eurozone.
The desert of the real
Having said that, the colossal support programme by the EU and the IMF will only be able to help Greece escape a crash. A hard landing is unavoidable. In a sense, Greece now finds itself in "the desert of the real," as its standard of living is beginning to align to a world without loans and to reflect the country’s actual production of wealth. Greece’s only chance is to stay in the Eurozone and pursue reform. Difficult as it may be, this is the truth…
Greece, Germany, and the rest of Europe have struck daring compromises and made huge sacrifices in order to keep the Eurozone together. Let us not call it quits now. Let us not allow populism to prevail. Let us not give the enemies of a united Europe the opportunity to smell blood. Let us remember that hundreds of thousands of Greek workers helped power the post-war German industrial renaissance. Today, millions of Germans are powering Greece’s only “heavy industry” – tourism. Let us realise that only a few years ago a German team manager was worshipped as God in my country, after achieving one of the greatest upsets in the history of European football. Let us understand, before it’s too late, that the road ahead is a long one, but that it is not a viable shortcut to jump off the cliff. We only have a few weeks left…