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Bucharest
February 4, 2023
EDITORIAL

On Greece, differently

For well over two years Greece is the unit of measure of the recent evolution of European history. Since we are dealing with the sovereign debt crisis in Europe, the future of the common currency, more seriously with the future of the European Union, the Greek file, through its size, seems to determine a disproportionate insistence on it compared to the huge, continental-sized stakes. Irrespective of how massive the Greek debt is, how modernly unstructured the Greek economy is or how bloated and expensive the Greek public sector is, this country’s debt file is a drop in the ocean in the infernal ensemble of the old continent’s current financial and economic puzzle. Nevertheless, Greece, or more precisely its case – defined by the international media as one capable of overturning the European construct, to revert Europe to its parochial and conflicting past – makes the headlines of the global media from this point of view. Greece has become the symptom of Southern Europe’s decadence, of its lack of competitiveness compared to the high-performing and rich North which is forced to pay the profligacy of southerners accustomed to undeserved and generously paid holidays and thus incapable to keep up with the European Union’s exigency other than by resorting to fraud. Variations on this theme can be found not just in articles and studies published by both serious publications and tabloids, but also in the comments that readers post with ease and even passion after reading them. Of course, there were economic-financial specialists that underlined this unbelievable paradox and tried to set things on their normal course. Public opinion from various countries realized the incongruity of the vastness of the stakes in the ensemble of the European crisis with Greece’s ‘Lilliputian’ case. Paul Krugman, winner of the Nobel prize for economy and one of the staunchest critics of the manner of tackling the European crisis established by the Frankfurt School and the European Central Bank, recently wrote on his blog, using incontestable data on the Greek economic development in the last decade, that “yes, Greece was poor and relatively unproductive. But its famous lack of competitiveness is a recent development, caused by massive post-euro inflows of capital that raised costs and prices. And that’s the kind of thing that currency devaluations can cure.” So, on one hand the current serious situation of Greek finances is the result of an uncontrolled invasion of common currency, and the consequence was to make the country over-indebted to others that designed and profited from this rain of gold on the Greek economy; on the other hand, not just Greece is responsible for the current situation it finds itself in, the roots of today’s crisis and of the North-South divide we notice today in Europe can be found in the very decision to set up a common currency and its subsequent evolution. To quote a similar opinion belonging to a respectable website (Bloomberg): “Merkel should explain that the Euro helped Germany increase its exports, in part because Greeks, Italians and Spaniards were borrowing to buy German goods. German exporters made money by selling more to the profligate Mediterraneans; German banks made money by financing those sales; and German workers got jobs they wouldn’t otherwise have had. None of this should take away from Germany’s achievements in undertaking reforms that drove down relative wages and made the nation competitive again – pain that countries such as Greece refused to undergo at the time. But Germans need to be told about the Euro’s yin as well as its yang. Otherwise they may unwittingly destroy many gains the Euro gave them and badly weaken the EU”s political fabric, which Germany did more than any other nation to create.” There is no need to say that opinions diametrically opposed to the one exemplified above abound in articles and studies, as well as in the comments posted by readers. Here are some of the comments posted on the article published by Bloomberg: “The problem is that all solutions have the hard working Germans paying more to support a lifestyle in profligate countries that even the Germans can not dream of. Retiring at 50, paying no taxes while working and the like. It is time, the German people stood up and said no. They will do a favor for all hard working people of the world. Otherwise, we will end up taxing hardworking people to pay for the lazy. End result is as more wealth creators get fed up supporting the lazy, they will stop working that hard and the global living standard will go down. Merkel must be told to follow German laws.” Starting last week, Greece has a new government, one determined to apply the austerity policy discussed along with representatives of international financial institutions so that the Greek economy would go through the crisis and become competitive once again, without leaving the Euro Area. The new government is the result of fast negotiations that followed parliamentary elections on June 17 – elections that were carefully watched by the whole world, so much so that some European leaders accommodated their departures to the G-20 summit in Mexico so that they would know the outcome of the Greek elections – and consists of representatives of the New Democracy, a centre-right party that won the elections, Pasok, a socialist party, and of the Democratic Left. This coalition of parties – a premiere in Greece’s modern history – has the majority of Parliamentary seats it needs in order to be able to apply the agreed austerity programme (probably adjusted to make room for economic growth) and to prevent the country from going into a worse crisis. Syriza, a far-left alliance, was runner-up, running on a platform that stipulated the rejection and renegotiation of the austerity plan but maintaining Greece in the Euro Area. Forming a government on the basis of this platform would have deepened the crisis in Greece and Europe alike and would have opened the flood gates to the affirmation of far-right parties at continental level. It’s obvious that the new government’s mission is not easy at all. It has to create the conditions for a new economic start and judging by some comments in-the-know that recently appeared, even the conditions for a profound transformation of the political and social fabric. From this point of view, the European Union’s support for the terms of the austerity programme that Athens assumed responsibility for in March so that it would facilitate economic growth – after all, a more general demand in the whole of Europe today – will be decisive. Because the issue of the European financial crisis is not determined by Greece and the incontestable side-slipping in its socio-economic macro-management, side-slipping the entire political class is guilty for, but is the expression of large-scale global developments in whose framework the competition for power in the ensemble of the international system of states, the emergence of great powers and the decline of others play a role that is anything but negligible.

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