Debt crisis: What can Greece do now?
6 September 2011
Everyone now grasps that the Greek government cannot reduce its debt as promised, and the news has rattled the financial markets. In Athens there’s a feeling of helplessness in the air, as captured in this editorial in To Ethnos.
Europeans do not believe that we want to be saved! The indicators are in the red while structural reforms continue to lag. Without credibility, what is there to renegotiate? For anyone who knows a little about the Greek economy, it was abundantly clear that the goals of the austerity plan – above all, the measures announced in 2011 – were very ambitious, even too ambitious. In other words, they could not be pulled off.
It’s not just because of “political resistance”, which is nevertheless real and which no one can ignore; it’s because of unreasonable delays. And to this we must add the quality of political and administrative personnel in the country and that of the legal and judicial system.
The IMF-EU-ECB “troika” and the Greek government have made a big mistake by setting the bar too high, despite the reluctance regarding the “recipe” and how to push it through. With its back to the wall, the government received a visit from the experts of the troika last week – a visit that was hastily broken off.
The latter, meanwhile, continue to feed markets with unrealistic forecasts and more talk of “more difficult” and “more expensive”, which provokes consequences diametrically opposed to those intended. The reality is that, though much has been accomplished, Greece is seen internationally as a do-nothing country.
That’s one side of the story. For many European leaders, bankers and technocrats have grasped what is happening and are denouncing the “excessive pressure” being applied to Greece that is leading to those results far removed from the ones expected.
The other side of the story is – failure. The government talks endlessly of “mergers” and “elimination” of public bodies and, more generally, of reforms, yet it has done next to nothing. What’s more, “mismanagement” in the public sector carries on largely as it did before. Recent statements by the Deputy Minister of the Interior on public administration bodies prove it. It is still rather strange that, two years after slashing wages and pensions by up to 1000 euros a month and raising taxes, fiscal fraud and mismanagement in the public sector remain at the highest levels.
All this makes for a ‘bad recipe’ that, beyond the social injustices it creates, leads to an out-of-control recession and a jobless rate that is “a knife to the throat.” That’s where we stand today.
Europeans do not believe that we want to be saved. Numerous indicators are in the red, and many of our goals have not been met. There is a problem of revenue, of delays in bringing forward structural reforms and, once again, credibility. This all makes it rather hard to implement the agreement of July 21 [the new rescue plan worked out by the countries of the euro zone] which is full of grey areas and limits the options for renegotiating the terms of the austerity plan.
We are on the edge.